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City Watchdog to pay £21m in bonuses to staff - Printable Version

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City Watchdog to pay £21m in bonuses to staff - David Guyatt - 25-02-2009

Performance related remuneration I'm sure...

City Watchdog To Pay £21m Bonuses To Staff
Wednesday, February 25 04:57 pm
Sky News
The City watchdog, accused by some of ignoring the risks that allowed the banking system to fall apart, is set to pay staff £21m in bonuses. Skip related content

Financial Services Authority bosses revealed the scale of the rewards, which amount to an average of more than £7,000 per employee, during a session in which they were grilled by MPs.

The disclosure came despite FSA chairman Lord Turner attributing some of the failures of banks on their remuneration policies.

He told the Treasury Select Committee: "Poor practice has played a role, although it's difficult to know how big a role.

"If you have such (reward) structures, and there have been in the past, they will create incentives to bet the bank."

But he insisted blame for not spotting danger in the financial system was partly down to "political" factors and the system of regulation - not the watchdog itself.

Lord Turner said there was pressure from above to make regulation "more light touch".

He blamed a widespread view that regulators should not interfere with decision-making within banks - and said there had been too much faith in the idea markets were self-correcting.

The peer suggested such a soft approach characterised its scrutiny of institutions such as Northern Rock, HBOS and RBS.

"I think (the FSA's actions were) a competent execution of a style of regulation and a philosophy in regulation which was, in retrospect, mistaken."

But asked whether the FSA was now "fit for purpose", Lord Turner responded: "It is going to be fit for purpose, given the changes that we are going to make."

He went on: "These are not minor changes. These are a revolution in the approach."

Lord Turner joined the FSA last year along with chief executive Hector Sants - who was also giving evidence to the MPs.

Mr Sants disclosed the size of the bonus pot as he insisted there was still a place for performance-related rewards.

He said he did not think anyone else at the FSA would be "volunteering" to follow his example and giving up their bonuses.