(qlmbusinessnews.com . Thu 16th Oct, 2025) London, UK —
New Bonus Regulations Set to Propel UK Ahead of Global Financial Practices Starting This Thursday
Senior bankers in the UK are set to receive their bonuses more promptly due to eased restrictions, a move initiated to stimulate competitiveness by aligning closer with global financial practices. This development comes as a modification of the stringent measures implemented in the wake of the 2007/2008 financial crisis, where bankers formerly had to wait for up to eight years to fully access their bonuses. This measure aimed to ensure that the rewards were for deals demonstrating long-term profitability.
Effective from Thursday, the waiting period for bonus payouts will be reduced to four years, with the possibility of initial payments being made from the first year onwards, a significant shift from the previous regulation that allowed for payments to commence after three years.
The regulatory bodies, including the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), have reassured that despite these relaxations, there are sufficient measures in place to deter imprudent risk-taking among bankers. This adjustment seeks to enhance the UK's appeal as a financial hub, drawing it closer to practices in other major financial centres, notably contrasting with New York’s policy of not requiring any deferral of bankers' bonuses.
The move is also perceived as a step further away from past regulations, including the abandonment of an EU-wide cap that previously restricted bonus payments to double the base salaries of bankers. This cap was criticized for its role in promoting a culture of excessive risk-taking, identified as a catalyst for the financial downturn nearly two decades ago that had a devastating impact on the global economy.
Sam Woods, the Chief Executive of the PRA, emphasized that the revised rules strike a balance by trimming bureaucratic hurdles without compromising the lessons learned from the 2008 financial crisis. He highlighted the reform as a testament to the UK's dedication to fostering a competitive financial landscape.
Earlier in the year, Chancellor Rachel Reeves held meetings with leading regulators at 11 Downing Street, encouraging the exploration of means to alleviate unnecessary regulatory burdens and bolster the UK’s business environment.
The timing of the new regulations, taking effect ahead of the traditional January bonus season, is opportune for numerous financial institutions that have reported robust earnings amidst market volatility, benefitting from heightened trading activities in shares, government bonds, commodities, and currencies.
Sarah Pritchard, the Deputy Chief Executive at the FCA, reassured that despite the eased restrictions, senior managers are expected to adhere to rigorous standards and assume responsibility for decisions adversely impacting consumers and markets. This reform signifies a pivotal effort to enhance the UK’s stature while sustaining prudent managerial conduct within the finance sector.
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