No plan yet to extend banker pay rules – UK’s FSA
LONDON, Dec 8 (Reuters) – Britain’s financial watchdog said on Tuesday it had no plans to alter existing curbs on bankers’ bonuses and remuneration, or to extend them beyond the banking sector, until it reviews the rules in the middle of next year.
The Financial Services Authority (FSA) said on Tuesday holding back on change would allow regulators to assess the impact of EU changes and the effects of a banking review published by City grandee David Walker.
The FSA, criticised for failing to address problems that led to a near-collapse of the banking system, laid out its new code of practice on pay in August, including a ban on entering into contracts with individuals which provide guaranteed bonuses for more than one year. [ID:nLC475859]
In the code for large banks, mortgage firms and broker dealers, it also said two thirds of bankers’ bonuses should be spread over three years.
Publishing feedback from the industry on Tuesday, the FSA said it had decided not to alter or extend the rules to other FSA-authorised firms — such as asset managers and insurers.
“We will review the effectiveness of the (remuneration) code in mid-2010, and we will then consider modifying and/or extending the code beyond large banks and broker dealers,” it said in a newsletter for regulated firms.
“This is so we can ensure firms are complying with the various European directives on remuneration and address any relevant recommendation made by Sir David Walker in his review of corporate governance.”
The FSA said any extension of the code beyond banks and broker dealers would be “applied proportionately”, after firms outside the banking sector complained there was no link between pay in their industries and the crisis. They argued the changes, designed for large banks, would place unnecessary costs on other firms and potentially put them at an international disadvantage.
The new code comes into force on Jan. 1. (Reporting by Clara Ferreira-Marques; Editing by Greg Mahlich) ((firstname.lastname@example.org; +44 207 542 3214; Reuters Messaging: rm://email@example.com))