LONDON (Reuters) - Fund managers investing in banks in Britain should stand up to the lenders more by voting down objectionable pay packages, former chairman of the parliamentary treasury committee and outspoken bank critic John McFall said on Tuesday.
Banks are paying out bonuses based on 'fictitious measures of profit' that do not take into account costs from misconduct fines and reorganisation, McFall wrote in an article on the website of bank reform advocacy group New City Agenda.
"We will only see a change of culture when fund managers demand transparent assessments of progress and senior executives feel real financial pain for presiding over misconduct," McFall wrote.
Bank investors overwhelmingly voted to approve executive pay packages at the big banks during the recent annual general meeting season in April, despite voicing concerns about how shareholders have suffered for banks' past failings.
McFall's comments come as Britain's biggest banks prepare to report their half-year earnings and face the possibility of a recession following the UK referendum vote to leave the European Union.