The Financial Secretary to the Treasury (Mr Mark Hoban)
The Government have today launched a consultation on a mandatory requirement for the largest UK banks and foreign banks operating in the UK to publish the details of the level and composition of remuneration of their eight highest-paid senior executive officers. The first disclosures would be made in 2012, in respect of the 2011 financial year.
In February 2011, the Government announced an accord between the UK Government and major UK banks under the name “Project Merlin”. As part of this announcement, the Government committed to consulting on extending the remuneration disclosures of the highest-paid non-board executives made under Project Merlin to major UK banks from 2012 onwards.
Remuneration practices in the financial services sector have incentivised excessive risk-taking in some cases, contributing to the severity of the financial crisis. While a number of UK, international and European initiatives have led to improvements in the alignment of risk and reward in the financial services sector, more detailed remuneration disclosures for the highest-paid senior executives at the largest firms will provide better oversight of incentives. This information will encourage improved shareholder governance and enhance public scrutiny, which, in turn, is expected to facilitate better decision making by boards in relation to senior executive pay.
These proposals have been designed to minimise potential costs and external impacts, including the impact on privacy. A full explanation of the regulatory changes and draft implementing provisions is set out in the consultation document and impact assessment. The consultation will be published on the HM Treasury website, and the consultation period is scheduled to end on 14 February 2012.
Following consideration of responses to this consultation, the Government will take a decision on whether amendments to the draft legislation are required, before publishing a summary of responses document and laying final regulations before Parliament during summer 2012.