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FSA new code of practice is falling apart

The Financial Services Authority (FSA), in conjunction with the UK government, initially outlined new regulations and new laws which would govern how and when bonuses were paid out in the UK banking sector. To great applause from the public and fellow MPs, the authorities claimed they had reined in the power of the UK banking sector and bonuses would be deferred for up to 3 years in order for potential risk assessments to take place. However, the situation today, only a few months later, is very different and the regulations are in no way watertight.

The so-called new regulations and laws which were to be put in place to control various areas of the banking industry are now no more than guidelines. There is no legal or moral obligation for banks to abide by these guidelines and only 26 firms have signed up to the agreement even know initially the government had expected 47 companies to join the scheme.

The truth is that banking and financial companies will need to pay the going rate, in the worldwide banking industry, to attract the sharpest minds in the banking world. The UK financial sector has been very successful in attracting some of the world's best-known financial institutions and the sharpest minds in the industry to London. This has been the strength of the UK financial sector and those operating in the UK will fight tooth and nail to retain this position.

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