Under the current rules, bankers who are guilty of misconduct can be forced to pay back their bonuses up to seven years after they've been received. But Balls said he thinks seven years is “too weak”, and that extending the period would ensure bankers behaving inappropriately “pay the price”.
“The current proposals to claw back bonuses are too weak and do not cover a long enough period of time,” he said. “We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out.”
The plans were proposed ahead of the publication of Labour’s banking reform paper, which is released next week.
The Bank of England extended the clawback period last year to tackle misconduct such as rigging interest rates and reckless risk-taking, which can take years to emerge.
Ed Balls used the recent allegations around HSBC's Swiss banking arm as an example that “wrongdoing can take years to uncover”.
“After so many scandals we need major reforms and long-term cultural change to restore trust and ensure our banks start working for consumers and businesses again,” he added.
The party also announced that it would require banks to publish the number of employees earning more than £1 million, if it wins the general election.
