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Fsa Bonuses Rise By 40pc

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FSA bonuses rise by 40pc in spite of financial crisis

City watchdog the Financial Services Authority has paid out almost £20m in staff bonuses, an increase of more than 40pc, despite the banking crisis of the last year.

By Amy Wilson

Last Updated: 8:21PM BST 31 May 2009

The move comes as fresh questions have been raised over the "unforseeable" nature of the collapse of Northern Rock and HBOS.

The FSA paid out £19.7m in bonuses last month, compared with £13.9m the previous year, with one official receiving £90,000. The regulator, which is cracking down on bonus payments across the banks, defended the increase, saying it had about 250 extra staff in 2008 compared with 2007, and that it had to pay more to attract and retain the highly-qualified people needed to improve regulation in the wake of the financial crisis.

"To suggest that we should in effect cut this element of the FSA's total remuneration when we are being urged to upgrade our skills base makes no sense," the regulator said. The FSA said previously it would increase bonus payments to up to 15pc of staff costs, from 12pc in 2007.

The Liberal Democrats criticised the "bonus bonanza" at the publicly-funded FSA. "Regulators must follow the lead of those in the rest of the public sector who have promised to freeze executive pay," said shadow minister Don Foster, who obtained the figures under a Freedom of Information request.

News of the bonuses came after the Financial Times reported that Northern Rock's vulnerability to a crisis in wholesale lending markets was identified by the FSA in a "war game" back in 2004.

The regulator's risk simulation exercise showed Northern Rock's business model posed a systemic risk that could in turn hit HBOS, the mortgage lender rescued by Lloyds last autumn. The FSA declined to comment.

FSA chief Hector Sants said in 2007 that no "reasonable professional would have anticipated that set of circumstances".


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Seriously the FSA has to attract high calibre people from the private sector. Whether it is however is another matter.

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