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<p>The UK is at the forefront of global efforts to tackle excessive pay in the financial
sector and ensure that pay is aligned with performance; our tough Remuneration Code
requires deferral of at least 60% of bonuses of senior bankers and limits the amounts
that can be paid in cash. Bonuses are down significantly since their peak under the
last Government, and are now largely deferred and paid in shares.</p><p> </p><p>In
contrast, the EU's bonus cap is a poorly thought through measure that undermines rather
than reinforces our efforts by pushing up fixed pay. It was introduced without any
proper impact assessment and has serious issues around its compatibility with the
EU Treaty, and for these reasons we are challenging it in the European Court of Justice.
However, pending the outcome, the Government is fully implementing the cap in the
UK.</p><p> </p><p>The Prudential Regulation Authority and Financial Conduct Authority
have responsibility for ensuring that remuneration practices in the banking sector
are compliant with the new rules.</p><p> </p>
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