Top bankers in the UK could be able to cash in their bonuses sooner, and fewer may be subject to pay restrictions, as UK regulators move to relax rules for the financial sector post-Brexit.

The Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA) set out the plans to reduce red tape.

Proposed changes will see the period that bonus payments can be deferred for the most senior bankers reduced from eight years to five years.

Deferrals are when bonuses for staff are paid out in future, rather than immediately, and can be cancelled if the performance of the business changes.

Shortening the deferral period – which for less senior bankers would be reduced to four years – means people can receive the cash faster.

The regulators said this change would make the UK a more attractive place to work, because current deferral periods are typically longer than in some other countries.

“These proposals on bankers’ bonuses will support UK growth and competitiveness without undermining financial stability,” said Sam Woods, chief executive of the PRA.

“We should not return to the very dangerous pay structures that were commonly in place before 2008, but these proposals will reduce bureaucracy and support responsible risk-taking.”

The latest proposals follow last year’s decision to axe the cap on bonus payouts for top City bankers, which was previously limited to twice the level of fixed pay.

Mr Woods recently said the bonus cap was “clearly damaging for competitiveness” because it made it harder for UK-based banks to bring in top talent from abroad.

The PRA and FCA also propose scrapping some of the criteria that mean bankers must be identified as material risk-takers (MRTs), meaning their work has a material impact on the bank’s level of risk.

The regulators said the current criteria mean some people can be wrongly categorised as MRTs and be unnecessarily subject to restrictions on their pay.

Simplifying the process would give banks less rule, and therefore more flexibility to decide which employees they think identify as MRTs, according to the proposals.

Harvey Knight, head of the UK financial services regulatory team at law firm Withers, said it was an “encouraging development that the long overhang from the financial crisis of some 15 years ago is at last being reduced”.

“It was always an overly punitive sanction to subject bankers’ remuneration to such long periods of deferral of up to eight years,” which he said encouraged a laid-back attitude to spotting potential issues before bonuses are paid.

Simon Youel, head of policy and advocacy at campaign group Positive Money, said: “It seems a bizarre time for the Bank of England to loosen restrictions on bankers’ bonuses, given the governor’s recent warnings about the risks of complacency since the last financial crisis.

“Bankers’ bonuses are widely acknowledged to have fuelled the excessive risk-taking that previously crashed the economy, and more money wasted on bonuses means less capital for banks to invest productively in the economy.”