Labour set out “major reform” to the banking sector – including extending banker bonus clawback

Labour have published an outline of how they’d reform the banking sector today.

The paper is spearheaded by Ed Balls, Shadow Chancellor, and Cathy Jamieson, Shadow Financial Secretary to the Treasury, who are in visiting a business in Bedford.

In the paper, the party will lay out a serious of measures such as introducing legislation that will allow government to retrospectively claim back bankers bonuses from those who have been involved in “inappropriate behaviour” in the last 10 years (currently this stands at 7 years) and introducing a one-off tax on bankers’ bonuses – the money would be used to help pay for Labour’s Compulsory Jobs Guarantee.

Labour also explain in this report that they’d create a British Investment bank to help fund small and medium sized businesses and extend the levy on the profits of payday lenders, which would be used to fund alternative credit providers.

Balls explained the importance of these measures, particularly given scandals in recent years:

“Too often in recent years our banks have fallen far short of the standards expected of them. After so many scandals we need major reforms and long-term cultural change to restore trust and ensure our banks start working for consumers and businesses again. 

“Banks are essential to our economy, but we need them to work better for the businesses and working people who rely on them. 

“We need much more action than this government has been prepared to take. So Labour’s banking reform paper sets out how we will change rules on bonuses, increase competition and get more lending to small and medium-sized businesses. 

“We will extend to at least ten years the period bank bonuses can be clawed back in cases of misconduct. As we have seen in recent days, wrong doing can take years to uncover. The current proposals to claw back bonuses are too weak and do not cover a long enough period of time. We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out.

“And we will establish a proper British Investment Bank to help growing businesses get the funding they need to expand and create jobs. Because it’s only when working people and businesses succeed that Britain succeeds too.”