The chancellor Alistair Darling pledged to work with the Financial Services Authority (FSA) in order to improve pay structures as part of an attempt to tighten regulations with the UK’s banking sector.
In his Pre-Budget Report, Darling said: “The Financial Services Authority is now considering changes across the regulatory system – including banks’ capital requirements, liquidity conditions, accounting rules and pay structures. The new chairman of the FSA will also examine whether the right processes are in place to ensure the FSA can supervise the system.”
The FSA sent out a ‘Dear CEO’ open letter in October to 28 financial institutions saying that irresponsible pay and bonus structures within the city were linked to the current economic crisis by rewarding short-term success.
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