Bankers’ bonus bill in Queen's Speech looks threatening but has no teeth

The Financial Services Bill gives the Financial Services Authority, in effect, the power to tear up bankers’ contracts that include guaranteed bonuses if they appear to reward undue risk-taking.The bill is designed to address what is perceived to be excessive pay in financial services. The recent banking crisis has been blamed on paying large bonuses to bankers who engaged in unduly risky activity for short-term gain. The crisis has fed the debate on how employee performance should be rewarded, especially how reward should be balanced against employee actions that expose an employer to risk. The control exercised by company shareholders – supervising remuneration levels and ensuring company interests are safeguarded – is often criticised as ineffective.