Banks look into clawback rules concerning executive awards
by Luke Whitmore, 20th May 2011
Barclays and RBS have announced that they may seek to reclaim
some of the cost of PPI compensation from executive bonuses.
Following the lead of Lloyds TSB, the two banks have declared
that they are going to look into the legal possibility of forcing
high-profile bankers to pay back executive awards received for
selling Payment Protection Insurance - much of which, it has now
been revealed, was taken out by customers as a result of misleading
and forceful selling tactics.
Lloyds announced at a general annual meeting this week that they
were looking into the possibility of forcing high-ranking bank
executives to take some of the blame for the scandal, and return
their bonuses in order to cover the price of PPI refunds.
Win Bischoff, the chairman of Lloyds, said that "The
implications on compensation are being considered by the
remuneration committee and will be determined by the board in due
course, in line with the FSA code on compensation."
Now Barclays and Royal Bank of Scotland are taking a similar
tack, unveiling plans to reassess directors' bonuses and establish
how much of it was based on profit from mis-sold PPI - and whether
they might be able to use clawback rules to have that portion of
the money returned.
It is perhaps no surprise that the banks are looking to claim
back these executive awards - Lloyds TSB has had to set aside £3.2
billion to cover the number of mis-sold PPI compensation claims
they expect to receive, while Barclays and RBS are together having
to foot a bill of almost £2 billion.
Earlier this month the banks capitulated in their legal battle
in the Financial Services Authority, who had introduced new rules
on PPI mis-selling which required banks to look over the policies
they had sold in the past and apply these new regulations
retroactively. When a high court ruling went against them, the
banks initially planned to appeal, but eventually gave up and are
now obligated to work to refund customers.
If you have been sold Payment Protection Insurance you did not
need or want, you may be able to reclaim PPI.
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