LONDON (ShareCast) - Chancellor Alistair Darling has warned banks not to slip back into their old habits and accused some of complacency now that the credit crisis has eased.
"If they go back to the way they were without asking themselves
over and over again whether they understand what they are doing, that would be disastrous for them and the rest of the world," he said in an interview in the Independent.
"There are people who are too complacent in my view. They need to be brought back to earth," he added.
The government is expected to instruct the FSA to take a more proactive approach to prevent a return to pay and bonuses linked to short-term profits.
However, he rejected the idea of a salary cap on City workers to stop previous excesses. "You can't have a pay policy in legislation," he said.
Darling also dismissed talk of a battle between the FSA and Bank of England over which agency regulates the UK's financial sector going forward.
"It is not a turf war," Darling said in the interview. "It is a question of ensuring they both do the job they are set up to do and both do it effectively.
"They are not competing with each other. They are complementary".
Darling indicated that controls on financial institutions generally will be tightened in forthcoming White Paper on financial regulation.
The FSA and the Bank of England are both set to get more powers, with hedge funds likely to come under the sway of the FSA.
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