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FSA warns on investment bank bonuses as it sets out review plans

The FSA is to publish a general review on remuneration structures of the London market after reiterating concerns over bonuses being paid.

In a letter to CEOs, the regulator’s own chief executive Hector Sants says inappropriate remuneration schemes “particularly but not exclusively in the areas of investment banking” have played a part in the current crisis.

The FSA says it has no intention to become embroiled in setting remuneration levels, but Sants does urge firms to carefully consider their policies, claiming that changes must be made immediately if sound risk management is not already in place.

The statement reads: “We would further expect firms to be moving towards good practice. We recognise that performance-adjusted, deferred compensation arrangements are complex to design: nevertheless, if they are not already in place we expect firms to be considering actively how they might be incorporated into remuneration structures within a specified time period.”

The review will be published early next year with the FSA visiting all recipients of the letter, and will be released on a no-names basis.

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