by Chris McLaughlin
Control of massive bonus payments to individuals in banks and City institutions is to slip through the Government’s new regulatory net.
The head of the financial watchdog empowered by Chancellor Alistair Darling to maintain a squeeze on the re-emergence of the banks’ “old habits” has declared that it is not the job of the Financial Services Authority to restrict bonuses.
“The question of the size of individual payments is not one for the regulator”, said FSA head Hector Sants earlier this week. “That is one for politicians and society as a whole.”
His remark contradicts the message from Mr Darling when he announced new powers for the FSA four weeks ago in which he made it clear the purpose was to keep the lid on any return of the bonus culture. In an interview with Tribune three weeks ago, Mr Darling said: “It’s right that the FSA now has the powers to say to a bank…you can’t do it…ultimately the FSA can put you off the road.”
The FSA report, which was due to be published after Tribune went to press, further waters down the crackdown on bonuses by stepping back from the Treasury proposal that payment of bonuses should be deferred till evidence is produced that they are deserved.
