Britain is leading the way to ensure that bankers' bonuses encourage good practice rather than excessive risk taking, it was claimed.
Speaking after shadow chancellor George Osborne suggested that bumper bonuses should be curbed at every bank which has benefited from any sort of taxpayer support, the British Bankers' Association (BBA) said the UK was leading the world with its reforms.
Its chief executive, Angela Knight, said: "We are actually going first in the UK. At the G20 in April lots of countries said they would go to change their structures but I don't think anyone else has yet."
City watchdog the Financial Services Authority (FSA) issued a new banking code of practice on Wednesday and was immediately accused of watering down its original proposals although the BBA said the code - which comes into force next year - was the right way forward.
The FSA, which the Conservatives plan to scrap if they win power, said it expected firms not to offer guaranteed multi-year bonuses.
The shadow chancellor appeared to toughen his party's line on City payouts by indicating that restrictions should apply even when institutions have not directly taken government money.
"It is totally unacceptable for bank bonuses to be paid on the back of taxpayer guarantees," Mr Osborne said in an interview with the Guardian. "It must stop."
But Ms Knight said: "I would be surprised if there was a total ban on bonuses because bonuses are paid in a lot of industries."
She added that "big bonuses are paid against big results" which meant big tax payments.
Ms Knight said banks were not currently paying bonuses but added that in future proper account must be taken of risk and bonuses must reflect long-term good performance, encourage good behaviour and discourage "excessive risk taking".
