FSA’s Sants: Not my job to set bonuses
HECTOR Sants, head of watchdog the Financial Services Authority (FSA), will this week refuse to bow to pressure to bring in rules to cap City bonuses.
Sants has said it is not the regulator’s job to set company pay levels, only to ensure pay does not encourage risk in the financial system.
In the FSA’s guidelines on pay and bonuses, expected to be unveiled in the next few days after weeks of consultation, firms will be instructed to ensure pay reflects an employee’s long-term performance and to discourage short-term risky bets designed to boost bonus packages.
The sky will remain the limit for City bonuses, with the regulator instead set to insist a portion of employee bonuses be left in the form of shares of the issuing firm for a minimum period, to help foster a long-term outlook.
Sants said yesterday pay levels are an issue for “politicians and society as a whole”. “The question of the size of individual payments is not one for the regulator.”
The government has faced furious calls to cap City bonuses, with executives seen to be taking away huge payouts despite making the risky decisions that led to the credit crunch.
Anger over bonuses hit fever pitch when in February former Royal Bank of Scotland boss Sir Fred Goodwin was awarded a £650,000-a-year pension package when he left the bank. He led RBS’ disastrous acquisition of toxic Dutch bank ABN Amro that led to its subsequent taxpayer bailout. Sir Fred has since agreed a lower pension.