The bankers’ bonus cap, which limits the pay of top City and Canary Wharf executives, could be scrapped by new Chancellor Kwasi Kwarteng.
The cap, which was brought in as part of EU-wide efforts after the financial crisis, has long been criticised as an anti-competitive stranglehold on the capital’s competitiveness.
Kwarteng wants to scrap the cap as part of efforts to revitalise the City and give London a competitive edge over European rivals, according to reports first in the FT and confirmed by City A.M. this evening.
Last month Liz Truss, Kwarteng’s boss and Prime Minister, said it was time to ditch EU-era regulation in an interview with City A.M.
Truss said that the City is a “jewel in the crown of the UK economy but for too long its potential has been held back by onerous EU regulation, which have stifled growth and stunted investment.”
Whilst the cap means that the UK is in line with Frankfurt and Paris markets, City grandees have long grumbled that it has allowed New York and Singapore to have the jump on the capital when attracting the very top talent.
The ceiling limits bankers’ pay at twice their annual salary.
Rishi Sunak, the former Chancellor, had been expected to outline a series of post-Brexit reforms in his Mansion House speech earlier this year, but resigned before he could outline his proposals.
Alongside the removal of the bankers’ bonus cap, City bodies have long pushed for reform of Solvency II regulations – which limits the amount pension funds and insurers can invest in longer-term projects – and MiFid 2 rules.
Kwasi Kwarteng became Chancellor after Liz Truss became Prime Minister at the beginning of last week.