The Financial Services Act 2010 (c. 28) is an Act of the

Parliament of the United Kingdom The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body of the United Kingdom, and may also legislate for the Crown Dependencies and the British Overseas Territories. It meets at the Palace ...

which regulates bonuses paid to employees of banks. It was announced on 27 September 2009 by

Prime Minister A prime minister or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. A prime minister is not the head of state, but r ...

Gordon Brown James Gordon Brown (born 20 February 1951) is a British politician who served as Prime Minister of the United Kingdom and Leader of the Labour Party (UK), Leader of the Labour Party from 2007 to 2010. Previously, he was Chancellor of the Ex ...

on ''

The Andrew Marr Show ''The Andrew Marr Show'' is a Sunday morning talk show presented by Andrew Marr. It was broadcast on BBC One from 2005 to 2021. The programme replaced the long-running ''Breakfast with Frost'' as the network's flagship Sunday talk show when Dav ...

'' on

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One. Brown said that the new law would be included in the next

Queen's speech A speech from the throne, or throne speech, is an event in certain monarchies in which the reigning sovereign, or their representative, reads a prepared speech to members of the nation's legislature when a session is opened. The address sets fo ...

and was the result of talks at the

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summit in

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where other countries were looking at similar action. He also said that the Act's purpose would be to ensure that bankers after the global economic crisis do not go back to "business as usual". The overall purpose of the Act is "to improve levels of confidence in the banking sector by limiting its losses and by supporting its economic revival. The Act received

Royal assent Royal assent is the method by which a monarch formally approves an act of the legislature, either directly or through an official acting on the monarch's behalf. In some jurisdictions, royal assent is equivalent to promulgation, while in othe ...

on 8 April 2010." It came into effect on 8 June 2010. The Act was called in 2010 "a milestone with regard to the regulation of the financial sector in the UK."

Provisions

The Act has amongst its several provisions: # to require rules for remuneration of "authorised persons," (Para. 11) # to include penalties for banks that do not follow a set of standards for methods of remuneration, and a "resolution plan," (Para. 12, 14) # to prohibit or to "require disclosure of,"

Short selling In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common Long (finance), long Position (finance), position, where the inves ...

. (Para. 13) In particular, the

remuneration Remuneration is the pay or other financial compensation provided in exchange for an employee's ''services performed'' (not to be confused with giving (away), or donating, or the act of providing to). Remuneration is one component of reward managem ...

provisions are designed to reduce

systemic risk In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the ...

, or "risk culture".

References

United Kingdom Acts of Parliament 2010 {{UK-law-stub

Provisions

See also

References