James Moore: Lloyds' timing is handy with these clawbacks but why must it stop there?

Outlook: PPI is small potatoes when you consider the biggest hit executives landed shareholders with

So Lloyds Banking Group is getting tough with its executives. Those who presided over the bank when it was merrily misselling worthless payment protection insurance (PPI) policies alongside personal loans are going to have to forgo (some of) their bonuses.

The leaking of the board's ostensibly hardline approach (presumably after a certain amount of prodding from the regulators and the Government) means that Lloyds goes into its results smelling of roses. Handy, that, when you're planning to announce losses which could reach £4bn.

The clawback means that the former chief executive Eric Daniels, together with a number of his boardroom buddies and one ortwo other senior bosses, will lose a combined £2m.

It isn't entirely clear how this was calculated. Bonuses are supposed to be based on a variety of performance targets. Did they come into play? Or did the Lloyds bosses simply get together, hear what the regulators were saying, and realise that if they came up with a big enough looking number they'd get a much-needed PR boost?

This is a bank, remember, whose chairman, Sir Win Bischoff, once lectured journalists about the need to get to a place where "rewards that shareholders have approved" could be paid to poor little executives.

Even then, although £2m looks like a big number, it doesn't amount to a hill of beans when compared with the £3.2bn that Lloyds has set aside to cover the cost of compensating those mis-sold PPI policies.

Lucky old Antonio Horta-Osorio (pictured). Before becoming chief executive at Lloyds, he was the boss of Banco Santander's UK arm. Lloyds ponied up a multimillion-pound package to compensate him for the shares he would have lost through leaving. Given that, it's hard to see how Santander might claw back any bonuses from him, assuming it wanted to. He had also already waived his 2011 bonus before Lloyds said the PPI scandal would see a reduction in the overall bonus pool for that year.

When all is said and done, though, PPI is small potatoes when you consider the biggest financial hit that certain of Lloyds executives (including Mr Daniels) have landed their shareholders with.

The decision to rescue HBOS has cost them nearly 10 times as much, their investments having been diluted through two multibillion-pound cash injections from the Government, one of which came as part of a massive rights issue.

We've yet to see any clawbacks coming from that little doozy.

Mr Daniels has always claimed that shareholders would eventually reap the benefits. When precisely? Some 630 branches are already having to be hived off as the price of the bailout.

Meanwhile, the Office of Fair Trading has said that it feels a fresh competition inquiry into the banking sector will be needed.

Care to guess where the focus of that will be, given the dominance Lloyds now enjoys in myriad retail banking categories?

There is, of course, one crucial difference between the PPI scandal and the fateful merger with HBOS. The latter was waved through by the bank's institutional shareholders; the fund managers who are charged with overseeing the pensions and other savings of millions of ordinary people. It is not just Mr Daniels who should be giving up his bonus.

Santander is wrong and should stop moaning

Poor old Banco Santander. Its UK arm has become the latest victim of the Financial Services Authority's bully boys.

The meanies have relieved it of £1.5m, which will likely be charged to shareholders because it just wouldn't be fair to hit the bonuses of the people in the division who were responsible. They didn't do anything wrong, poor lambs, as Santander was at pains to stress.

The fine was imposed, according to the FSA, because various "structured" savings products were not fully covered by compensation schemes if things were to go disastrously wrong. Santander failed to explain this, but maintains that it simply used language in its literature that was "consistent with the market at the time in question". The fact that, as we now know, this was wrong appears not to have registered. Santander's statement was similar in tone to the one issued by the ex-Merrill Lynch executive Andrew Osborne in response to his £350,000 fine for market abuse last week. Both pose as the wronged party. But, significantly, neither have opted to avail themselves of the right to challenge the FSA. Instead they have paid out significant sums.

Prior to the FSA's creation, the City waged a very effective campaign to soften its harder edges as the Financial Services and Markets Bill made its tortuous way through Parliament. Just how effective that was can be seen by contrasting the record of FSA with that of the Securities and Exchange Commission in the US. Both police similarly sized financial centres, but SEC enforcers go in wearing hobnailed boots with Walther PPKs at the ready. They don't just issue fines, either. In the more serious cases miscreants get taken down to Rikers Island jail in handcuffs and are relieved of much of their wealth while they are in there.

By contrast the FSA wields the equivalent of a popgun, or it did before Margaret Cole became enforcer in chief. But even in the current climate, in which the political mood requires financial regulators to be mean and nasty, those on the wrong side of the rules have ample opportunity to challenge the findings.

Santander chose not to. As did Mr Osborne. They preferred to pay up and whine. Which tells you all you need to know, really.