Pay clawback warning for failed bank bosses

8th Dec 2010 10:55

The heads of Britain's failed banks may have to pay back two years worth of pay, according to the chairman of the Financial Services Authority (FSA).Lord Turner told the BBC that such a rule, already in place in the US, would make banks think twice about taking excessive risks.His comments follow a letter sent to him by business secretary Vince Cable who was "disappointed" at last week's decision by the City watchdog not to take action against the bosses of Royal Bank of Scotland (RBS).There was no evidence that RBS, which lost a record £24bn in 2008 and is now 83%-owned by the government, was involved in any fraud or dishonest activity in the lead up to the financial crisis.Ex-City minister Lord Myners thinks the conclusion "stretches credulity" and claims there was a "lamentable failure of leadership at the bank".Lord Turner wrote in today's Financial Times: "Achieving a general shift in attitudes to risk and return may require that bank directors and executives are made subject to quite different incentives than those that are appropriate in other sectors of the economy."He also objects to calls for the investigation to be made public. A formal report hasn't even been put together, so couldn't be easily published, he says.Other ideas knocked around by Lord Turner include an automatic disqualification from working in the banking sector.