Support for tax to curb bonuses

Published on BBCnews, Aug 27, 2009.

The boss of the UK’s financial services watchdog says he would be happy to consider the use of a new tax on banks to prevent excessive bonus payments …

… French President Nicolas Sarkozy has said he will press for tougher controls on bankers’ bonuses at the next G20 summit in the US city of Pittsburgh in September.

‘A ploy’:   

The FSA was formed in 1997 to regulate the UK’s financial services sector and some analysts have suggested there may be political reasons for Lord Turner to be tough on the City at the moment.

“[The comments] may be a ploy to persuade Mr Osborne and the Conservatives that, were they to be elected, they should retain the FSA rather than pass the baton for regulation to the Bank of England, which is one of the shadow cabinet’s proposals,” James Bevan from CCLA Investment Management told the BBC.

This is not the first time Lord Turner has spoken out against large bonuses in the banking sector. He said back in June that the FSA had “concerns” about executive pay.

And earlier this month, the FSA said it was introducing new rules to ensure bank bonuses were not guaranteed for more than a year, and that senior employees should have their bonuses spread over three years.

These rules are due to come into effect from January.

Lord Turner’s opinions on the issue carry particular weight because he is both chairman of the financial regulator and a City insider who used to hold senior positions at both Standard Chartered and Merrill Lynch.

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