At a time when cash is tight and good business opportunities are hard to come by, who would expect financial big guns to start fretting about whether their past gains were really deserved?

At a time when cash is tight and good business opportunities are hard to come by, who would expect financial big guns to start fretting about whether their past gains were really deserved?

But Guy Hands clearly does. The head of private equity firm Terra Firma has committed to hand back GBP70m of performance fees generated since 2004. The firm's partners, he says, will waive the carried interest earned over the past four years in recognition of a steep fall in asset values. Hands himself was due to receive EUR40m of the fees.

In the firm's annual report, he wrote: 'Terra Firma will in March distribute back to investors the carried interest that had previously been earned  and which would have formed the bulk of the reward for Terra Firma's senior team's hard work since 2004. This is absolutely right; our investors have suffered and therefore our rewards should suffer at the same time.'

Another private equity luminary, Blackstone Group co-founder and chairman Stephen Schwarzman, saw his earnings decline by 99 per cent last year. As the world's largest buyout firm posted a USD1.33bn loss, the 62-year-old chief earned a USD350,000 salary and opted not to take a bonus, the firm said in a filing with the Securities and Exchange Commission. Schwarzman received USD180.1m in 2007 and gained another USD684m when Blackstone went public.

Hands told investors in Terra Firma's annual report: 'The short-term bonus culture of most financial groups meant that many senior executives were incentivised to ignore or avoid longer term risks, whilst enjoying extraordinary short-term gains.'

Who knows, maybe other members of the financial industry who benefited hugely from the excesses of the bubble years will find it in them to follow suit?