The Financial Services Bill and the Pre-Budget Report both contain measures designed to reform remuneration practices in the financial services industry which engage Article 1 Protocol 1 of the European Convention on Human Rights (the right to peaceful enjoyment of possessions) as a result.
Powers to interfere with an individual's remuneration may be incompatible with the Convention if their scope is not defined with sufficient precision to enable people to know whether they might be affected by the exercise of the power. The Financial Services Bill appears to give the Financial Services Authority the power to interfere with existing contractual terms. The Government says, however, that this is not its intention. We recommend that the Financial Services Bill should be amended to make clear that powers to interfere with contractual terms are not retrospective.
Taxation measures are incompatible with the Convention if they are devoid of reasonable foundation or impose an individual and excessive burden on particular people. We conclude that the tax on the payment of bonuses announced in the Pre-Budget Report is unlikely to be incompatible with the Convention.
We also clear from scrutiny a number of the recently published Government bills.