By Jonathan Davies

Senior bankers could be forced to wait for up to 10 years to receive their full bonuses under new rules described as the 'toughest in the world'.

The Prudential Regulation Authority (PRA) and the Financial Conductor Authority (FCA) are planning to introduce an initial seven-year clawback period for lower level bankers. But it will also introduce an extra three-year period for the most senior officials.

The new rules hope to encourage long-term goals in banks, rather than hitting short-term targets.

FCA chief executive Martin Wheatley said: "Today's rules are part of a wider package that is being announced over the summer to embed an accountable culture in the City.

"Our rules will now mean that senior managers face clawback of bonuses for up to 10 years, if misconduct comes to light.

"This is a crucial step to rebuild public trust in financial services, and allows firms and regulators to build long-term decision making and effective risk management into people's pay packets."

PwC's Jon Terry said: “As promised by the Government, the UK now has the toughest bank pay rules in the world.

"However, the implications for UK banks’ competitiveness can’t be ignored.

"Although the PRA says they don't want this to happen, it is likely that British banks will need to pay a premium to attract senior executives outside the UK, and more in fixed pay then their foreign competitors."