Mark Carney pay plan comes under attack Mark Carney's plans to make badly-behaving bankers pay back their salaries, and not just their bonuses, could face severe legal challenges and might clash with the European Union's bonus cap, lawyers and industry figures warned. The Governor of the Bank of England said he was interested in the idea of bankers being paid with "performance bonds" - bank debt that would be linked to how the company fared over a number of years. As well as spreading pay over a longer period, such instruments could be withheld if a bank was fined for wrongdoing. This would put bankers, rather than shareholders, on the hook for misconduct. Mr Carney said: "Standards may need to be developed to put non-bonus or fixed pay at risk. That could potentially be achieved through payment in instruments other than cash. But the European Banking Authority, the EU's banking regulator, has said pay that can be clawed back would count as a bonus. It would therefore be subject to the cap on variable pay that was recently introduced by Brussels. Currently, bank bonuses are restricted to no more than twice an individual banker's fixed salary. If a portion of an employee's salary were to become retrievable, and thus constitute variable pay under EU rules, banks may be forced to breach the cap or readjust pay levels. Alice Greenwood, a senior associate at Freshfields, said: "At the moment you have a tension with the EU rules on the bonus cap." Indeed, Mr Carney, speaking in Singapore yesterday, said the bonus cap was one of the reasons that salaries should be subject to clawbacks. "It is unfortunate, for example, that new European rules to cap bonuses ... have the undesirable side effect of limiting the scope for remuneration to be cut back," he said. Legal experts have warned that Mr Carney's proposals could quickly run into difficulty. Steven Cochrane, a partner at City law firm Pinsent Masons, said: "It is extremely unlikely that existing contracts of employment would allow for this. Employees" contracts would need to be amended and any such terms could in any event be held unenforceable. Any such changes to how banks treat fixed pay would represent a sea change in compensation culture and deter talent from entering financial services. Bank bonuses are already subject to clawbacks for seven years after being paid under Bank of England rules introduced in the summer. Bankers also face jail for misconduct under a new "senior persons regime." "Why don't we see how these requirements bed down?" asked one industry source.