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Banks Told To Reclaim Bonuses Over PPI

Banks have been told to claw back bonuses from executives involved in Payment Protection Insurance mis-selling, Sky sources have said.

The move signals another official clampdown on the City.

Sky News' City editor Mark Kleinman said: "There's yet more evidence of the relentless pressure that Britain's big banks are coming under to curb bonuses ahead of their annual results this month.

"I understand there was a meeting this morning at the offices of the Financial Services Authority attended by the bosses of all the major banks, including Stephen Hester of The Royal Bank of Scotland and Bob Diamond from Barclays Bank (NYSE: BCS-PA - news) .

"At this meeting the bank bosses were told by the chief executive of the FSA that they had to demonstrate urgent efforts to claw back bonuses paid to past executives involved in the selling of payment protection insurance policies.

"The mis-selling scandal relating to PPI last year resulted in big banks setting aside almost £6bn to compensate the victims of that mis-selling.

"I am told that the FSA has been incredibly robust in trying to force banks to disclose how far they have gone in trying to reclaim bonuses paid to executives, even if they have left the banks that they used to work for."

Up to three million people are entitled to payouts after being pressured into taking insurance to cover loan payments if they fell ill or lost their jobs - some were unaware they were even paying for it.

Lenders set aside billions of pounds to cover the costs after a legal High Court challenge to PPI complaints was dropped last year.

But almost a year later, the ombudsman says a significant number of cases are still outstanding.

The latest clampdown comes amid a political row over the decision to take away the knighthood from former RBS (LSE: RBS.L - news) boss Fred Goodwin.

Prime Minister David Cameron and Labour leader Ed Miliband traded accusations over City bonuses as the Labour leader called for banks to be forced to disclose how many executives earn more than £1m.

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