FSA’s proposed powers on bank bonuses ‘headline chasing’
Shadow Treasury secretary says government proposals to curb excessive risk taking will mean little
The government has been accused of “headline chasing” with its proposed
Financial Services Bill, one of the handful of measures expected in the Queen’s
Speech on Wednesday (18 November) outlining the government’s programme for
Parliament before a general election next spring.
Detailed proposals for a new power to set aside personal contracts between
banks and staff with terms considered likely to encourage risky behavior will be
given to the Financial Services Authority according to details leaked in
advance.
Other punitive proposals include provisions for the FSA to be given the power
to punish the individuals responsible as well as the companies by whom they are
employed, copying measures already in force in Japan.
The power to tear up contracts for bankers will be triggered if the FSA
consider their terms encourage excessive risk-taking or guarantee future bonuses
regardless of performance.
But Tory Shadow Chief Treasury Secretary Philip Hammond said: “This looks
like yet more headline-chasing from the Government.”
He said the FSA had claimed to have the power to sign off on the framework
and structure of bonuses a year ago.
He added: “The public will be asking what this announcement means for the
bonuses that are due to be paid this Christmas – and the answer is nothing at
all.”
He said what was really required is legislation putting the Bank of England
back in charge.