FSA given more power to tackle bonuses
The Financial Services Authority will be been given more power to tackle excessive bank bonuses and financial wrongdoing.
The measures, expected to be outlined in this week’s Queen’s Speech, are part of a broader financial services bill set to apply to all UK banks.
Chancellor Alistair Darling is also expected to propose a series of measures to strengthen the regulator’s power to punish individuals and banks who break the rules.
Darling will give the FSA the right to tear up contracts for bankers who break rules by excessive risk taking, and will also enhance the FSA’s ability to hold executives personally accountable for misconduct.
The regulator will also be given powers to discipline individuals who perform key control functions without the necessary approval, rather than just fining the company involved. To avoid putting the financial system at risk, banks will also be required to hold larger capital reserves to ensure they can be wound up in the event of failure.
The new rules will come into effect next year if the Financial Services Bill passes through Parliament before the election.
However, a British Bankers’ Association spokesperson says: “We have always known legislation about banking was likely in this year’s Queen’s Speech. We clearly need to see the detail of these proposals but we would be wary of any actions which set the UK at a disadvantage, discourage international businesses from coming here and make it more difficult to attract, reward and retain high quality staff.
“British banking is an global business and many of our banks operate outside the UK. Moves to bind how our banks operate overseas could put the industry at a serious disadvantage and also discourage global banks from coming to the UK.”