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Are long-term guaranteed bonuses a thing of the past?

The Financial Services Authority (FSA) has today warned UK financial companies that guaranteed bonuses beyond 12 months may well be in breach of the proposed rule and guideline changes about remuneration packages. This appears to be a somewhat knee-jerk reaction to what has become a common practice in the financial sector, and other sectors of the UK economy.

It will be interesting to see how these potential changes are addressed by the UK government and particularly in the public service sectors and the likes of Northern Rock, Bradford & Bingley, Lloyds bank and Royal Bank of Scotland. The government has a significant stake in all of these companies and ultimately could push through any such changes which it deems fit. Will the authorities take heed of their own rules and guidelines or will we see a hands-off approach, as we have seen in the past, and the banking sector be ultimately left to its own devices.

The subject of remuneration in the UK financial sector has been grabbing the headlines for some time even though there are still significant bonuses and remuneration packages available in other areas of the UK economy. While it is easy to see why the authorities have attacked the financial sector there may be a case for unfair focus from the various regulators.

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