FSA cracks down on City bonuses

The Financial Services Authority, in its latest missive to bank CEOs, says it has no wish to become involved in setting bank remuneration levels. Yet, despite these assurances, the regulator has made it patently clear that the bonus-driven excesses of the past will no longer be tolerated.

"There is widespread concern that inappropriate remuneration schemes, particularly but not exclusively in the areas of investment banking and trading, may have contributed to the present market crisis," states FSA chief Hector Sants, pointing out that in many cases the remuneration structures of firms may have been inconsistent with sound risk management.

The letter continues: "It is possible that they frequently gave incentives to staff to pursue risky policies, undermining the impact of systems designed to control risk, to the detriment of shareholders and other stakeholders, including depositors, creditors and ultimately taxpayers."

It's the first time I've seen the FSA reference the interests of taxpayers over those if its City constituency.

Will wonders never cease?

Next thing you'll be telling me the Government has taken controlling stakes in our biggest high street banks.