Forties People

Gordon Brown last night pledged to implement a widespread reform of the banking bonus system should Labour retain power in the May 6th general election.

The prime minister, speaking to an audience of 300 economists and business leaders at London's Royal Institution, said the Financial Services Authority (FSA) would be delegated power to "quash" banking bonuses that are seen to be incentivising risk-taking in the financial sector.

Labour hope that this move, which will form part of the party's election manifesto, will encourage bankers to take greater responsibility in the post-recession period. A clause announcing similar measures was included in the watered down financial services bill, which was heard in this week's customary pre-election wash-up period.

Said Mr Brown: “This year we have seen a welcome reduction in the proportion of revenues that global investment banks have paid out in bonuses.

"But we need to ensure that this is a structural change not a one off response to public pressure, so our financial services authority will be given powers to quash those contracts which incentivise reckless risk taking and instability."

Posted by Mary King.