Those in the banking sector look set to get an early Christmas present.

After working for more than a decade under remuneration restrictions, the Cabinet today approved plans to ease them.

Why were the current restrictions brought in?

In the wake of the financial crash the Government, like others around the world, introduced limits on bankers' pay.

Executives at the top of banking were largely blamed for the catastrophic lending policies and practices which ultimately led to the Irish banks being bailed out, at a cost to date for the Irish taxpayer of €45.7bn.

The feeling was that bankers should no longer benefit significantly when the cost to the State had been so severe.

It was also thought important to materially break the link between pay and financial performance in order to prevent a repeat of the shoddy practices that caused the problems in the first place.

The restrictions, introduced in 2009 and targeted only at the bailed out Irish banks, consisted of a salary cap of €500,000 and an effective ban on bonuses and variable pay, including for things like private health insurance and childcare.

Then in 2011 a super tax of 89% on bonuses over €20,000 was also introduced, after it emerged that some of the covered banks were still issuing "contractual" bonuses to certain staff, because they argued they were legally obliged to.

What then has changed?

The banks have lived with the restrictions since then.

But in the last few years they’ve become increasingly publicly frustrated with the situation.

They’ve argued individually and through their industry representative body that the restrictions were leaving them at a competitive disadvantage when it comes to talent.

The lenders claim they are competing for skills with other financial services firms and companies outside the sector and those businesses don’t have to manage with any such restrictions.

As a result, they claim they are finding it increasingly difficult both to attract and retain staff, not just in finance-related specialties, but also in areas such as technology where skills are universal across sectors.

The banks are also looking at what is happening internationally.

In September the UK government announced it was removing its cap on banker bonuses.

While since 2014 the European Banking Authority has allowed bonuses of up to twice the salary of the individual concerned.

The situation was also made more tricky for the Government when stockbrokers Davy and Goodbody were bought by Bank of Ireland and AIB respectively and exemptions were given to staff working at both brokers who were entitled under their contracts to performance related pay.

The Irish State has also been steadily reducing its stake in the covered banks.

It no longer owns any of Bank of Ireland and its shareholding in AIB is heading for 57%, while the State’s stake in Permanent TSB is to reduce to around 60% as part of the deal to buy a large part of the departing Ulster Bank.

All that means that the Government’s moral hold over the banks is slowly being eroded.

Another factor is that the Government has just completed a review of the retail banking sector.

Its recommendations will give the Minister some political cover on the issue.

What is now being proposed?

Under the plans that were approved by Cabinet today, the covered banks would be able to pay bonuses of up to €20,000 to their staff.

Restrictions on non-pay benefits, such as private health insurance and childcare, would also be lifted.

The plans also envisage that the current salary cap of €500,000 be removed from Bank of Ireland, as it is no longer partially State owned.

While AIB and Permanent TSB will have the salary cap lifted when the State's shareholding reduces to a specified appropriate level.

Where do unions stand on all this?

The main financial services union, the FSU, has sought the removal of the restrictions for some time.

Not because they want rich banking executives to get richer.

But more because ordinary front line bank staff are impacted also, as they currently can't receive normal remuneration benefits like health insurance cover from their employers.

Many are also on low salaries, and so the reintroduction of variable pay or bonuses would help them cope with the rising cost of living.

The FSU argues that staff in retail banks should not be treated differently to other staff working in the wider financial services sector who have access to financial assistance with healthcare and childcare costs and access to approved profit-sharing schemes among other benefits.

It also wants the retail banking industry to again become a career path choice of graduates.

Won't this be politically toxic for the Government?

Undoubtedly it is going to prove politically contentious.

But there is an acceptance in Government that it has to be done, and now seems to be the time to do it.

That’s because the Minister for Finance, Paschal Donohoe, is currently in the final weeks of office.

In a few weeks’ time he will move to the Department of Public Expenditure and Reform and will be replaced by Fianna Fáil’s Michael McGrath.

Dealing with it now means any kickback could be tempered by the change of ministries, leaving Michael McGrath with a relatively clean slate coming into office.

That, however, won’t stop some of the opposition from making hay on the issue.

Sinn Féin has been quick to criticise the move, arguing that at a time when households are under huge cost of living pressures, the Government should have its attention elsewhere and therefore the changes are tone deaf.

It also claims that the culture of the banks has not yet changed sufficiently to justify the easing of restrictions.

Hasn't it got a point on that?

The banks themselves would claim that the culture inside their institutions is hugely different to the way it was back before the financial crash.

The Irish Banking Culture Board, which has been working to improve culture, has said much progress has been made, but more needs to be done.

But Sinn Féin has pointed to the recent huge fines meted out to Bank of Ireland and AIB by their Central Bank over their handling of tracker mortgage customers and poor conduct around the issue – some of which, according to the regulatory continued until fairly recently.

On the other hand, it could also be argued though that with all the banks now having received fines, a line has been drawn under the tracker mortgage affair.

The party has also raised questions about the culture of accountability in the banking sector.

However, the Government is in the process of bringing through the Oireachtas legislation that would introduce a new senior executive accountability regime that would force banks to hold their staff to account for misbehaviour or poor conduct.

Ultimately though the Government will not have to alter legislation to give effect to the changes on bankers’ remuneration.

That’s because the original ban on salaries over €500,000 and on bonuses was not brought in using legislation.

And the super-tax on bankers’ bonuses only applies to those over €20,000.

So the Government won’t have to run the gauntlet of pushing controversial legislation through the Oireachtas on the issue, risking a backlash from its own backbenchers.