James Moore: The contract crackdown is just hot air

The FSA's oncern is the way in which people are paid and what they are paid for

So the Financial Services Authority is to get the power to rip up the contracts of bankers if they look like they offer too much financial encouragement to indulge in casino capitalism. It's going in the Queen's Speech and everything. "Look, look, voters, we're doing something about those dreadful bankers and their big bad bonuses."

Yes, the Government and its spin doctors have come up with yet another great way to generate some headlines with the aim of convincing the voters that New Labour is tough on bonuses, tough on the causes of bonuses in the run-up to the election. Is this the second or the third or the fourth weekend in a row something like this has leaked out?

It helps no end that the City has kept the pot boiling by appearing have fallen for it hook, line and sinker. So yesterday the ether was filled with loud denunciations of the Government's plans. Naturally, the British Bankers' Association was first out of the stalls, warning that such a measure will put British competitiveness at risk and (potentially) that "talent" might react by heading overseas.

Then there was Sir George Mathewson stepping up to the plate in the guise of "banking grandee" to warn about the "dangerous path" down which we will be travelling if legislation that would "interfere with the rule of law" were to be adopted.

You might just remember Sir George. He was the chairman of Royal Bank of Scotland until just before the financial crisis, and then worked for the hedge fund Tosca, which played an active role in the latter's disastrous takeover of ABN Amro.

Sir George really should have the grace to keep his counsel for his friends on the golf course. Most people would be forgiven for thinking "go get 'em, boys," when he suggests that an idea to squeeze bankers is a bad one. The same goes for the BBA these days, given its fondness for defending the indefensible.

But look a little more closely and you realise there's more spin than substance behind this wheeze. It may well find itself on the statute book, but whatever legislation results will probably end up like those daft laws from the Middle Ages that were technically enforceable for years but which no one in their right mind would have ever thought to use. These were the sort of laws that required every Englishman to keep 12 arrows sharp and true on pain of a weekend in the stocks, or which made it legal to shoot any Welshman venturing into Shropshire with one of them.

For a start, it's difficult to see how the regulator would be able to tell how a densely worded employment contract encouraged "undue risk taking" short of hiring a phalanx of employment lawyers at vast expense.

And the watchdog has, anyway, already told the banks that if they try to renege on agreements that demand payments are partially deferred, paid in shares and a subject to clawback, then they will regret it.

The signs are that (at least for the moment) this is a warning they are heeding after a few remarkably stupid incidences of "back to business as usual" emerged.

The idea may also be creating dangerous expectations about the FSA cracking down on the amount bankers are paid, which is really what bothers people. The watchdog can't really do much about that, and doesn't really want to. Its concern is the way in which people are paid and what they are paid for. So bankers are going to go on making a ridiculous amount of money, they just might have to wait a little longer to get their hands on it. This latest package of measures trailed by the Government will do little to change that.

And ultimately, quietly, some of the more ruthless banks might find that they are rather keen on the principle that they might be able to worm their way out of obligations that they have entered into, with the regulator's help. Because if that principle can be applied to the pinstriped whizzkids on the trading floors, it can also, very easily, be applied to the poorly paid individuals in the branches, who always seem to be the losers these days.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker