Lord Turner backs new banking tax - BBC News

Lord Turner backs new banking tax

Lord Turner has spoken out against large banking bonuses before

The boss of the UK's financial watchdog has said he backs a new tax on banks as a means to prevent excess bonus payments in the industry.

Lord Turner, chairman of the Financial Services Authority (FSA), told Prospect magazine much of the activities of the City of London were "socially useless".

The FSA said Lord Turner's comments came in a roundtable discussion, and were "not setting out any new policy".

A government spokesman said that tax policy was a matter for the chancellor.

'Nice revenue source'

This is not the first time Lord Turner has spoken out against large bonuses in the banking sector. He said back in June that the FSA did have "concerns" about executive pay.

If we introduce the wrong kind of regulation or the wrong kind of taxes we could [drive] business abroad British Bankers Association spokesman Brian Capon

And earlier this month, the FSA said it was introducing new rules to ensure bank bonuses are not guaranteed for more than a year, and that senior employees should have their bonuses spread over three years.

These rules are to come into effect from January.

Lord Turner told Prospect magazine that a tax on financial transactions in the City would cut banks' profits, and thereby reduce the funds available for bonuses.

He said such a tax would be "a nice sensible revenue source for funding global public goods".

British Bankers Association spokesman Brian Capon said the UK was the top centre in the world for global banking, "an achievement that we shouldn't take lightly".

"If we introduce the wrong kind of regulation or the wrong kind of taxes we could so easily lose that position by driving business abroad," he said.

The FSA was formed in 1997, and is tasked with regulating the UK's financial services sector.

Lord Turner's opinions on the issue carry particular weight because he is both chairman of the financial regulator and a city insider who used to hold senior positions at both Standard Chartered and Merill Lynch.