UK regulators 'will be able to rip up bankers' contracts'

16 November 2009

The UK government is set to bring in legislation that will allow the Financial Services Authority to rip up the contracts of bankers deemed to be enjoying excessive pay packets as a reward for risk-taking.

Although the new Financial Services Bill will not apply to current banking contracts and therefore will not affect 2009 bonuses, it is set to come into place from January next year.

The measures are to be outlined on Wednesday in the Queen's Speech.

In comments reported by the Guardian, City spokesman Lord Myners told Sky News: "What we are saying to the shareholders and boards of directors is: get real, recognize that the previous levels of bonuses are socially unacceptable."

Other proposals that will be put forward by Gordon Brown's government include one that will allow British customers to take part in US-style class action suits against financial institutions they feel have treated them badly.

Last week, Mr Brown sent officials to meet with the IMF to lobby for the implementation of a Tobin tax – a levy on transactions carried out between financial institutions.

By Asim Shah

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