European Union lawmakers have agreed to cap bankers bonuses.
The first law of its kind globally will bar bankers from awarding themselves payouts greater than their salary.
It is due to take effect in January next year but will only apply to payouts from 2015.
That is because a special provision recognises that bonuses are paid for the previous year’s work, so payments at the beginning of 2014 will not be affected.
The measure is designed to address public anger at the bonus-driven culture that encourages risk taking.
Many European politicians believe this culture exacerbated the problems in the sector, bringing many financial institutions in the region to their knees.
The new rules will have the biggest effect on Britain’s financial industry as it could mean some top bankers relocate outside of the European Union.
While the UK was strongly opposed to the measure, it was outvoted in the parliament. This is the first time the country has been outvoted on financial services, perhaps a sign of Britain’s waning influence in the EU.