LONDON - The British Bankers' Association (BBA) has issued a statement in response to the UK Financial Services Authority (FSA) announcement on August 12 that it had committed a remuneration code of practice to its regulatory handbook.
BBA chief executive Angela Knight welcomed the risk-based and long-term focus of the pay code, but stressed that its application to 26 large banks and financials operating in the UK was insufficient, and that other jurisdictions must implement consistent legislation to maintain a level playing field.
Knight said it is essential for other countries to catch up and implement remuneration codes of practice "on the same timetable", listing UK consequences of a loss of business and talent overseas, as well as jobs and tax revenue losses, if they do not.
"Our concerns are that other countries have talked about similar changes but have not made them. For this Code to succeed, our European partners and the G20 countries must also step up to the plate and do what the UK has done. The principal cause of the global financial problems was not bankers' pay. It was however a contributory factor globally - as such it needs to be addressed globally.
"Too often in the past, business has moved out of the UK, as in various ways our country has become uncompetitive. Many now rightly raise concerns that Britain has lost industry and manufacturing to other parts of the globe," said Knight.
The FSA has attempted to reassure the industry that its code of practice has been timed and formulated to protect against such eventualities, by adhering to international standards agreed at the G-20 through the Financial Stability Board (FSB) and broadly in line with European Union (EU) and Swiss proposals.
The regulator has already attracted media criticism for not being more punitive in its reaction to the pay debate, or introducing caps on bonuses or salaries, something US firms receiving state aid have been forced to adhere to, while US regulators have also backed away from the industry as a whole.
"We are not mandated to limit individual pay for social reasons," said FSA chief executive Hector Sants in an interview for BBC Radio 4's Today Programme. "There may well be debate about whether bankers should be paid multiples of [the pay of] doctors or others, but that debate is for government."