The Bank of England has admitted that its bonus clawback scheme, trumpeted as "robust action to tackle inappropriate remuneration", will not apply to any bonuses already awarded to bank staff.
The rules governing the clawback mechanism, which will come into effect from next January, will not apply retrospectively, the Bank's Prudential Regulation Authority confirmed. This was due to a concern that many banks would have to obtain their employees consent and "might be open to challenge for doing so".
"In order to ensure a consistent and even application of the clawback requirement across industry, the final rule requires the application of clawback only to awards made on or after 1 January 2015," the PRA explained.
The admission that the Bank's bonus clawback scheme will not apply to those who received bonuses before 2015 will be of little consolation to the public, given their mounting frustration that reckless bankers have got away with big bonuses after the financial crash without any sufficient punishment.
Luke Hildyard, deputy director of the High Pay Centre think-tank, told the Huffington Post UK: "The fact that the new rules won’t come into force until next year, and won’t apply retrospectively, feels a bit like locking the stable door after a very large pig has bolted.
"Obviously tighter rules making it harder for bankers to rake in million pound bonuses for cheating, conniving and reckless speculation are welcome. But most people will be amazed that these measures weren’t already in place.
"Instead of trying to find of making bankers bonuses more palatable with these elaborate clawback mechanisms, regulators should think about how they might stop top banks throwing such obscene amounts of money around in the first place."
The Bank's proposal could see senior bankers forced to hand back their bonuses seven years after they are awarded if they are found to have broken the rules or been reckless to an extent that financially damaged their firm or division. This will be marginally tougher than existing rules, with bank payouts deferred for five years and made largely in shares.
A spokeswoman for the free-market thinktank, the Institute of Economic Affairs, defended the Bank for not applying its bonus clawback retrospectively, arguing that "it shows that the Prudential Regulation Authority understand the rule of law."
She added: "The clawback scheme announced today however is an extremely substantial piece of regulation going forward, with the rules now faced by the UK banking sector being some of the strictest in the world."
The scheme comes after a series of scandals has hit the banking industry, including the mis-selling of payment protection insurance (PPI) and interest rate swaps for small businesses, Libor rate rigging and alleged manipulation of the global currency market.
Lloyds Banking Group was fined £218 million by US and UK authorities earlier this week for "shocking" rate rigging practises, including cheating the Bank of England out of nearly £8 million for its financial life support scheme.
Bank of England governor Mark Carney said such manipulation was "highly reprehensible, clearly unlawful and may amount to criminal conduct". Bankers were also urged to swear an oath "never to harm" their customers, in the same style as doctors have to do for their Hippocratic Oath.
A Treasury spokesman defended the bank's proposals, insisting: "This Government has been clear that banks must act responsibly in setting their pay policies, and we have consistently taken robust action to tackle inappropriate remuneration."
The Bank's proposals received lukewarm backing from Barclays boss Anthony Jenkins, who said a bonus clawback mechanism "can be extremely useful" and that "in principle" badly behaved bankers should be punished.
"I would say that in principle I support the idea that where there is wrongdoing there should be appropriate punishment," he told the BBC's Radio 4 Today programme.
"I believe that banks have to regulate themselves and that that's why culture is so important, so that banks do the right business in the right way."
Jenkins' remarks come as Barclays took another £900 million hit to cover compensation for payment protection insurance (PPI) mis-selling claims, seeing its profits for the first half of the year slide by 7%.
The bank said adjusted pre-tax profits for the period were £3.35 billion as earnings from its troubled investment arm - which is undergoing thousands of job cuts - slumped by 46% to £1.06 billion.
Barclays took the size of its PPI provision pot to nearly £5 billion after adding £900 million "as a result of the lower expected decline in claims". The sum topped up the existing £3.95 billion fund.