FSA will get power to veto bank pay and bonus deals
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The FSA will get the power to tear up bankers’ contracts under new powers to tackle excessive bonuses and financial wrongdoing.
The Financial Services Bill, outlined in this week’s Queen’s Speech, will allow the regulator to veto excessive pay and bonus deals that it fears might thr- eaten financial stability.
The bill will also see the creation of a financial education agency which will take over the FSA’s role in financial cap-ability and will roll out money guidance. The agency will be funded by the industry, which could mean that annual levies will rise in 2010/11.
The bill will also enhance the FSA’s ability to hold executives personally accountable for misconduct and strengthen its power to punish individuals and banks which break the rules.
The regulator is also set to be given powers to discipline individuals who perform key control functions without the necessary approval rather than just fining the company involved.
The new rules will come into effect next year if the bill passes through Parliament before the general election.
The British Bankers’ Association is warning that the new legislation might harm London’s ability to attract international banks. It says: “This would seriously disadvantage the UK economy and discourage businesses from coming here.”
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