UK begins legal challenge to bonus cap

The UK Treasury has launched a legal challenge against the European Union™s (EU) proposals to strict new caps on bankers™ bonuses.

Earlier last week, British Chancellor George Osborne filed the case at the European Court of Justice as he believes the EU cap on bonuses rushed through without thorough assessment of its impacts.

œ[The EU bank bonus cap will push bankers™ fixed pay up rather than down, which will make banks themselves riskier rather than safer. In other words, as the Chancellor has said, they may undermine responsibility in the banking system rather than promote it.” a Treasury spokesperson said.

“Regulation of pay in this manner goes beyond what is permitted in the EU treaty,” he added.

Michel Barnier, the EU commissioner for internal markets said he was not surprised by Osborne™s move as Britain was the only member country to oppose the plans.

The bonus cap proposals were approved by EU member states and the European parliament earlier in March despite Britain™s objections.

Britain™s Trades Union Congress (TUC) accused the British government of taking the bankers™ side ahead of ordinary people who have been made to pay the price of bankers™ folly.

The EU confirmed the new rules would not be applied until January 2014, as the officials seek to give the financial industry some time to complete legal preparations.

MOS/HE

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