Darling gives watchdog powers to 'tear it up'

Monday 16th November 2009

Legislative plans to be unveiled in the Queen's Speech this week will see the City watchdog given powers to tear up contractual agreements granting bankers "ludicrous bonuses."

Alistair Darling said the Financial Services Authority would be allowed to fine banks and stop bankers from receiving payments if they would cause instability in the financial system.

But the financial services bill will not be retroactive and therefore unable to prevent bonuses this Christmas.

The chancellor told the Sunday Telegraph the legislation was part of the government's plans to make bankers see themselves as "fellow citizens".

"Bonuses have been a symptom of the excessive behaviour of some banks over the last few years and even over the last few months," he said.

"[We will be] giving the FSA powers if necessary to tear up contracts that would result in payments being made that would cause instability.

"I've always been clear that I'm not against people being rewarded for hard work. What has gone wrong is where people were paid to take excessive risk and they were rewarded to do things that ultimately brought the banking system crashing down."

In a 'fireside chat' podcast published on the Downing St website Gordon Brown said the government was committed to a "transformation" of the way in which the financial sector is policed.

"And we will ensure that the banking crisis we have experienced over the last two years should never again come at a cost to the taxpayer," he said.

The prime minister added: "This is a difficult period for our country. But Britain has a bright future. One I’m optimistic about and which I believe can be one not of austerity, but progress, and one where all the people of Britain move forward together."

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