The FSA has not brought a single enforcement case over failures to comply with the regulator’s remuneration code since it was introduced three years ago.
The Sunday Telegraph reports FSA staff have been holding back from launching enforcement cases and are instead opting for regular informal conversations with banks and brokers.
One source told the newspaper: “We have seen at least one firm where more than half of its new staff have been hired with guaranteed bonuses, which is clearly against the spirit of the code that says these type of arrangements should only be used in exceptional circumstances.”
The FSA introduced its remuneration code in 2009 in a bid to reduce the size and number of payments made to new staff by banks.
Another source said: “Banks are doing all sorts of things to get around the code. The fact that no firm has been brought to book tells you everything you need to know about how worried they are about being caught.”
The FSA confirmed to the Telegraph no enforcement action had been launched over failures to comply with its pay code.
In a statement, the regulator said: “Our code expects guaranteed bonuses to be the exception, and if paid to new hires they should only apply to people in their first year in the job.
“We continue to work closely with firms to monitor how they comply.”