FSA proposes new bonus regulations

The Financial Services Authority (FSA) has proposed the introduction of new taxes on banks to keep a lid on bonuses.

Chairman Lord Turner said in a discussion with Prospect magazine that parts of the City have grown "beyond a socially reasonable size".

New regulations announced by the FSA earlier this month state that bank bonuses cannot be guaranteed for more than a year.

They also make clear that two-thirds of bonuses for senior employees will be spread over three years.

These regulations, which require banking and financial services firms to provide remuneration policy statements to the FSA by the end of October this year, are due to come into force in January 2010.

But Lord Turner suggested that authorities may need to go further in order to maintain sensible trading practices and prevent excessive risk taking.

"If increased capital requirements are insufficient, I am happy to consider tax on financial transactions," he remarked.

French finance minister Christine Largarde said recently that people with permanent jobs in banking operations should be entitled to bonuses.

However, speaking to French radio, she insisted they must only be related to institutional performances.

Updated: 28 September 2009.
Categories: banking-and-financial-services, market-and-industry-news.