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ARTICLE · 26 NOVEMBER 2008

Why The FSA May Be Interested In Your Bonus Scheme

Elborne Mitchell
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In recent speeches, both Callum McCarthy, outgoing Chairman of the FSA, and Hector Sants, its Chief Executive, have called upon the financial sector to reconsider its incentive structures.

United KingdomInsurance

By Alex Booth and Kate Payne

First published: Insurance Day [25th July 2008]

In recent speeches, both Callum McCarthy, outgoing Chairman of the FSA, and Hector Sants, its Chief Executive, have called upon the financial sector to reconsider its incentive structures. Their criticism is focused on remuneration structures which place excessive emphasis on short-term performance, in other words where employees receive immediate rewards and do not bear the consequences of any subsequent losses.

In the FSA's view, firms should focus on ensuring, as far as possible, that employees and shareholders share in the risk of both the upside and the downside. But how practical is that and who is the FSA seeking to protect?

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