FSA warns banks to change bonus policies

In the letter, the regulator says it does not wish to become directly involved in setting remuneration levels, but says policies should follow sound risk management systems and controls. Following the onset of the credit crunch, the resulting financial turmoil has resulted in widespread concern the multi-million pound bonuses available to senior bank staff have led to distortions in credit markets, and poor risk management practices. The FSA says bonuses have been, in many cases, “inconsistent with sound risk management” and gave incentives to staff to pursue risky business practices. Fi...