Lord Turner said the FSA would need to look more closely at remuneration
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Lord Turner, chairman of the Financial Services Authority (FSA) has said "we do have concerns" about executive pay. He was asked by the House of Commons Treasury Committee whether RBS chief executive Stephen Hester's pay package means it is "business as usual". Declining to discuss the specific deal, he said that he had seen "very aggressive hiring going on in investment banks". On Monday, RBS approved a pay package worth up to £9.6m for its boss. Lord Turner stressed that Mr Hester's pay was a matter for the government, not the FSA. 'No reward for failure' RBS issued a statement on Tuesday defending the deal. "We now have support for a remuneration plan that ensures the majority of Stephen's reward is non cash and based on his performance," said RBS chairman Sir Philip Hampton. "The long term incentives are worth little or nothing without a strong return to shareholders and there is no reward for failure in our remuneration policy." RBS is 70% owned by the taxpayer, so the Treasury had to approve Mr Hester's deal. Lord Turner said that in general the FSA needs to "intensify our focus" and "make significant changes to the remuneration approaches of banks and investment banks". But he added that he still believed executive pay was a relatively minor issue in the banking crisis, and that the crisis would have happened even if pay structures and incentives had been much improved. He pointed out that the boss of Lehman Brothers had held an extremely large holding of the investment bank's shares - but had still allowed the risk-taking that led to its collapse.
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