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ARTICLE · 03 NOVEMBER 2023

UK Regulators Publish Policy Statement On The Bonus Cap Removal

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On 24 October 2023, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (together, the Regulators) published their joint policy statement (Policy Statement)...

European UnionFinance and Banking
Neil Robson
Neil Robson
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Carolyn Jackson
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Nathaniel Lalone
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Christopher Collins
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Ciara McBrien
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On 24 October 2023, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) (together, the Regulators) published their joint policy statement (Policy Statement) to remove the existing limits on the ratio between fixed (i.e., salary) and variable (i.e., bonus) components of total remuneration (the Bonus Cap). This follows the Regulators' joint consultation on the Bonus Cap in December 2022 (Consultation) and comes nearly a year after Liz Truss' short-lived government first announced plans to abolish the Bonus Cap to boost the attractiveness of the UK financial services sector.

Background on the Bonus Cap

Following the 2008 financial crisis, the Bonus Cap was introduced in an attempt to curb excessive risk-taking in the UK financial services sector and remove a bonus culture encouraging short-term profits over longer-term stability. It was established when the UK was still a member of the European Union (EU) and limited how much

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