View more on these topics

‘Unjustifiably high’ bankers’ bonuses plummet

Bonuses paid to financial services employees dropped by almost 10 per cent in the year to March 2015, official data suggests.

Figures published by the Office for National Statistics show the total value of bonuses paid out increased by 2.7 per cent to £42.4bn. This is just 0.1 per cent lower than the record level in the financial year ending 2008, the ONS says.

Of this, some £13.6bn was paid in the finance and insurance industry, down 9.6 per cent year-on-year.

Payments across the rest of the economy rose 9.7 per cent to £28.8bn – the highest figure since the statistics authority began measuring the payments in 2001.

Across the economy, the average bonus per employee in the year to March 2015 was around £1,500.

Institute of Directors chief economist James Sproule says: “In the financial and insurance industries, the fact that bonuses now make up a significantly smaller chunk of take-home pay suggests steps have been taken since the financial crisis to rein in excess.

“Under pressure from politicians, the public and regulators, banks now realise that the culture of unjustifiably high cash bonuses as a reward for short-term performance is over. This system warped decision making, encouraged dangerously short-term thinking and, in the case of the Libor and Forex-rigging scandals, rewarded criminal behaviour.

“Nevertheless, we must caution against moving too far in the opposite direction. While bonuses in the finance sector have fallen by around 10 per cent, wages are growing at one of the fastest rates of any industry. This could mean firms are just shifting pay towards base salaries, rather than making sure bonuses reward employees who have delivered value for the company and hit stretching and long-term performance targets.”

Recommended

Williams-Peter-700.jpg
1

Analysis: BTL’s reputation is undeserved

How quickly the buy-to-let market has veered from celebrity to notoriety. For many, the very phrase is synonymous with the wider woes of the housing market. But the reality is more complex. Our analysis indicates buy-to-let mortgages have played an important but not dominant role in the growth of the private rental sector. What is […]

Wheatley-Martin-Speak-2012-700x450.jpg

How the FCA board debated Martin Wheatley exit

The FCA board debated the handling of chief executive Martin Wheatley’s departure just one day before it was announced to the market. Minutes from the FCA’s July board meeting, published yesterday, reveal how quickly the regulator moved in announcing Wheatley was leaving. The meeting was held on 16 July, and refers to the Treasury’s “very […]

Rookes-Caroline-MAS-2013-500x320.jpg

MAS attacked over ‘waste of time and money’ report

The author of an independent review into the Money Advice Service has slammed the organisation for “wasting time and money” by carrying out a review into whether it replicates the work of other bodies. In March, former Consumer Focus chair Christine Farnish published a Treasury-commissioned report calling for the MAS to be overhauled and to […]

Newsletter

News and expert analysis straight to your inbox

Sign up