UK Treasury Committee criticises FSA approach to bonuses

Daily news headlines

A report from MPs looks at financial remuneration and corporate governance

LONDON - The UK House of Commons Treasury Committee has released a report entitled: 'Banking crisis: reforming corporate governance and pay in the city', calling for more emphasis on remuneration reform in the regulatory response to the crisis.

The report criticised the Financial Services Authority's (FSA) Turner Review, released in March, for understating the role of the financial bonus culture in the crisis, and suggests the UK regulator is not addressing the problem.

"Bonus-driven remuneration structures led to a lethal combination of reckless and excessive risk-taking," said McFall. "The design of bonus schemes was not aligned with the interests of shareholders and the long-term sustainability of the banks and has proved to be fundamentally flawed."

The group of 14 MPs, chaired by the Labour Party's John McFall, says the financial meltdown has exposed serious flaws in banking remuneration policies, especially within investment banking culture.

The committee examines UK financial remuneration practices and the role of players - including non-executive directors, institutional shareholders, auditors, rating agencies and the media - traditionally seen as influences, to curb the perceived pay excesses of banks' senior managers and executive boards.

The report can be read here.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Financial crime and compliance50 2024

The detailed analysis for the Financial crime and compliance50 considers firms’ technological advances and strategic direction to provide a complete view of how market leaders are driving transformation in this sector

Investment banks: the future of risk control

This Risk.net survey report explores the current state of risk controls in investment banks, the challenges of effective engagement across the three lines of defence, and the opportunity to develop a more dynamic approach to first-line risk control

Op risk outlook 2022: the legal perspective

Christoph Kurth, partner of the global financial institutions leadership team at Baker McKenzie, discusses the key themes emerging from Risk.net’s Top 10 op risks 2022 survey and how financial firms can better manage and mitigate the impact of…

Emerging trends in op risk

Karen Man, partner and member of the global financial institutions leadership team at Baker McKenzie, discusses emerging op risks in the wake of the Covid‑19 pandemic, a rise in cyber attacks, concerns around conduct and culture, and the complexities of…

Moving targets: the new rules of conduct risk

How are capital markets firms adapting their approaches to monitoring and managing conduct risk following the Covid‑19 pandemic? In a Risk.net webinar in association with NICE Actimize, the panel discusses changing regulatory requirements, the essentials…

Building resilience into ESG risk management

Risk and resilience continue to play an important role in the navigation of an increasingly uncertain world. Fusion Risk Management explores why it is equally crucial for technology to support organisations in addressing pertinent environmental, social…

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here