The FSA may penalize banks who pay bonuses that encourage excessive risk-taking, new chairman Lord Adair Turner has told the BBC.
He said the FSA would not regulate how much was paid, but would ask banks to explain their bonus structures. Banks found to encourage risky actions could be compelled to hold more capital which would raise their costs. Lord Turner, who took over as FSA chairman on Saturday, told the BBC: "What we are now doing is saying to banks, explain to us what your structure of bonuses are. "If we think they are in danger of encouraging people through that bonus structure to take risky actions which appear to look good at the time, but which create toxic assets for the future, then we have the po...
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