Britain’s chief financial watchdog today described the EU’s cap on bankers’ bonuses as “self-defeating” and “perverse”.
Financial Conduct Authority chief executive Martin Wheatley told the Treasury Committee: “We shouldn’t have incentives for most major banks to increase basic pay. That seems a very perverse outcome.”
He also said the watchdog is investigating whether several other benchmark prices set in London have been rigged, but declined to name them. Several banks have been hit with huge fines over attempts to rig Libor interest rates, and there is a probe into foreign exchange trading.
But allegations have been levelled that several other prices may have been manipulated including oil and metals. “There are a number of benchmarks that operate in London that we’re investigating because of concerns that have been raised with us,” Wheatley said.
With regards to the probe into potential foreign exchange rates manipulation, he added: “I would be surprised if we got to conclusions within this year. I hope that we will next year”.
Wheatley said controversial sales incentives that led to Lloyds facing a record £28 million fine last year, had led to “a sales based culture that did serious harm”.
But he added: “The [sales]people were quite junior. Many didn’t think or know they were doing something wrong. They were just doing what their bank asked them to do. Many would say they didn’t know they did serious harm.”
