Legislation to control bonuses and improve corporate governance in the finance sector will be implemented in the next Parliamentary year, the Queen said today.
Speaking at the state opening of Parliament, the Queen revealed new legislation to increase the powers of regulators to "improve governance and control rewards".
The move was widely expected, and the FSA will now gain additional powers to restrict bank bonuses which the Government says caused the financial crisis.
Regulators at the FSA will gain the power to void employment contracts it considers ‘overly risky'.
It is also introducing a new code of practice for banks, which will require them to limit bonus guarantees to no longer than a year.
Both banks and insurers will be required to hold larger capital reserves and prepare ‘living wills', which will set out how a major financial institution should be wound down in the event of its failure.
Further details of the Finance Bill are likely to emerge in the Pre-Budget Report, due on 9 December.
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