The announcement saw the PRA reveal the final rules on bonus clawbacks. The authority increased the minimum period for which the reach of the clawback extends, from six years to seven years. Also the grounds on which the clawback powers apply have been slightly narrowed.

To see the final clawback rules click here.

The BOE and PRA’s proposals intend to improve individual responsibility and accountability in the banking sector. Those individuals eligible will be those whose behaviour and decisions have the potential to bring a bank to failure, or to cause serious harm to customers.

In reference to accountability, the consultations promote:

•             The ability to regularly vet senior managers for fitness and propriety;

•             The creation of a new set of Conduct Rules setting out standards of behaviour

Martin Wheatley, Chief Executive of the FCA said: “How a firm conducts its business and treats its customers must be at the heart of how it operates. This has to start at the top.

“Today’s consultations mark a fundamental change in the regulators’ ability to hold individuals to account, which is what the public expects of us. It will also build on the cultural change we are beginning to see in the boardrooms of firms across the country.”

Andrew Bailey, Deputy Governor, Prudential Regulation and Chief Executive Officer of the PRA said: “Holding individuals to account is a key component of our job as regulators of banks. The combination of clearer individual responsibilities and enhanced risk management incentives will encourage individuals in banks to take greater responsibility for their actions.

“We believe that enhancing individual accountability and improving the alignment of risk and reward should have a positive impact on behaviour and culture within banks and will help to ensure that they are managed in a way that promotes the safety and soundness of individual institutions."

In June 2013, the Parliamentary Commission for Banking Standards (PCBS) published its report “Changing Banking for Good” setting out recommendations for legislative and other action to improve professional standards and culture in the UK banking industry.  This was followed by legislation in the Banking Reform Act 2013.

The PRA and FCA are now consulting on proposals that incorporate and build on the Banking Reform Act and the recommendations made by the PCBS.

 The PRA and FCA aim to publish final rules in early 2015.