RECKLESS bankers could be stripped of bonuses even after they have cashed them in, under plans set out by the Bank of England.

The Bank is proposing new rules to toughen up the remuneration code, which would see employment contracts changed to allow for clawback of bonuses.

Regulators have the power to force firms to halt bonus payments that have not yet been cashed in, but once paid they are immune from clawback.

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The Bank is carrying out a two-month consultation on the new clawback plans where there is evidence of employee misbehaviour or significant error, where a firm or business division has suffered a material financial hit, or where there has been failure in risk management.

It also wants to ensure the rules apply to those indirectly responsible, such as bosses accountable for the behaviour of their staff, , and those who failed to take steps to identify or address misconduct.