UK banker bonuses to be paid out faster under rule change

Regulators say new rules will allow senior bankers to cash in bonuses sooner this year, making Britain a more competitive place to work.

The changes to payment rules go further than the original proposals set out last year prudential regulation authority (PRA) and financial conduct authority (FCA) said.

The amount of time bankers will have to wait before receiving the full amount of their bonus – known as the bonus moratorium period – will be reduced from eight years to four years.

Previous proposals had suggested reducing the referral period to five years for top bankers and four years for less senior employees.

Most senior bankers will be allowed to receive part payment of bonus from the first year under the new rules, instead of waiting till the third year.

The rules for 2025 salary awards and those not yet fully paid are scheduled to go into effect on October 16.

Deferral occurs when employees’ bonuses are paid in the future rather than immediately, meaning they can be canceled if business performance changes.

Reducing the moratorium period means people can access cash faster.

Regulators said the change would make the UK a more attractive place to work, as bankers currently have to wait longer to receive their bonuses than in some other countries.

“These new rules will cut red tape without encouraging the reckless pay structures that contributed to the 2008 financial crisis.” Sam Woodssaid the PRA Chief Executive.

“These changes are the latest example of our commitment to boosting the UK’s competitiveness.”

Sarah Pritchard, deputy chief executive of the FCA, said: “The new rules also mean that senior managers will continue to be held to our high standards and will be held to account where poor decisions affect consumers and markets.”

Regulators believe banking companies will still have enough time to find out if a staff member has made poor decisions or if their financial performance has deteriorated, allowing them to reduce bonuses before they are paid out.

It is also expected to help reduce the base salary, which is often increased to compensate for the red tape on bonuses.

Regulators are taking steps to relax rules City since BrexitWhich meant that Britain would no longer have to follow EU guidelines.