July 22, 2020 / 11:53 AM / 22 days ago

Bonuses must reflect COVID hit to business, says UK financial watchdog

LONDON (Reuters) - British banks and other financial companies must spell out how bonuses reflect the impact of the COVID-19 pandemic on their business, the Financial Conduct Authority said on Wednesday.

Banks are due to report second-quarter earnings that will highlight escalating provisions for loans more likely to default as businesses struggle to survive the pandemic.

“During this time of uncertainty and change, we expect you to ensure that your remuneration policies and practices remain aligned with your firms’ long-term business plans,” the FCA said in a letter to the chairs of remuneration committees of the firms it regulates.

“Our supervisors will continue to assess how your policies may have evolved in response to the impact of Covid-19, including the impact on bonus pools and individual remuneration outcomes.”

There was also a risk that financial firms were “deprioritising” their focus on maintaining high standards of conduct as they grapple with the crisis, the FCA said.

Swathes of traders and other financial employees have been working from home since March due to a lockdown, making it harder to monitor behaviour.

Reporting by Huw Jones; Editing by Jon Boyle and Nick Macfie

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