Labour says would extend bank bonus clawback to 10 years

By Kylie MacLellan LONDON (Reuters) - Britain's opposition Labour party said on Friday it would extend to at least 10 years the length of time over which miscreant bankers face having their bonuses clawed back, if it wins a national election in May. As part of a regulatory clamp-down on wrongdoing in the financial sector, the Bank of England last year announced bankers could have their bonuses clawed back for up to seven years from the date they were fully paid out. As the HSBC scandal has once again made banking ethics a hot political issue ahead of the May 7 vote, Labour finance spokesman Ed Balls set out his party's plans for the sector, and said current rules on bonuses were "too weak". "We need major reforms and long-term cultural change to restore trust and ensure our banks start working for consumers and businesses again," he said. "We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out." Under the current rules, banks have an option of extending the clawback period for another three years if by the end of the 7-year period a banker is being probed for possible misconduct. Balls said Labour would also enact a law requiring banks to publish the number of employees earning more than 1 million pounds and introduce a one-off tax on banker bonuses to help pay for a scheme to reduce youth unemployment. Labour is level with or just ahead of Prime Minister David Cameron's Conservatives in many opinion polls, but is ranked behind on economic competence. The Conservatives have sought to paint them as anti-business, something they deny. The Conservatives dismissed the banking plans, saying it was Labour who created the system of regulation which encouraged risk-taking. "Nobody will trust a word he says," a Conservative spokesman said. "Since 2010 we have been clearing up the mess ... we've introduced the toughest system of clawback and deferral of any financial centre in the world." Business group the Institute of Directors said Labour was right to push for greater transparency in reporting on pay and boosting competition but said ten-year clawbacks should be "reserved to matters where there is a significant on-going risk". "In general, conditions under which clawbacks can happen must be very tightly defined and relate to actions which can be clearly shown to have damaged the bank," IoD Director General Simon Walker said. (Editing by Andrew Osborn and Robin Pomeroy)