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Johannesburg - The sticky issue of banker bonuses and pay packages is not escaping Finance Minister Pravin Gordhan's crackdown on bank fees, generally high product charges and abuse in the financial services industry.
A document released by the Treasury on Tuesday, entitled A safer financial sector to serve SA better, said it fully supports international moves to rein in pay structures that encourage risky behavior.
"Many banking executives believed that they were entitled to big bonuses even when their banks clearly failed, and were dependent on taxpayer funds to save their banks," said the Treasury.
While the Treasury said bonuses in SA's financial services sector "appear not to be substantially out of line with those in other sectors in our economy", compensation guidelines of the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors will be incorporated into the implementation of Basel III and Solvency Assessment and Management.
SA's regulators are also proposing a new "twin peaks" model to regulation - first announced in February's budget and amplified in the document released on Tuesday - where the Financial Services Board (FSB) would look at consumer protection and market conduct, including fees, via oversight committees.
The central bank would then manage prudential regulation, like financial stability principles.
The gap in the old system was that banking market conduct was unregulated - so this aspect now falls within the new ambit of the FSB.
Jonathan Dixon, deputy executive officer for insurance at the FSB, said on Tuesday that the framework for its treat customers fairly project would also cover compensation practices.
He said this meant incentives should not have the outcome of treating customers unfairly, like where they encouraged quick sales upfront to ensure large and immediate commissions.
A document released by the Treasury on Tuesday, entitled A safer financial sector to serve SA better, said it fully supports international moves to rein in pay structures that encourage risky behavior.
"Many banking executives believed that they were entitled to big bonuses even when their banks clearly failed, and were dependent on taxpayer funds to save their banks," said the Treasury.
While the Treasury said bonuses in SA's financial services sector "appear not to be substantially out of line with those in other sectors in our economy", compensation guidelines of the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors will be incorporated into the implementation of Basel III and Solvency Assessment and Management.
SA's regulators are also proposing a new "twin peaks" model to regulation - first announced in February's budget and amplified in the document released on Tuesday - where the Financial Services Board (FSB) would look at consumer protection and market conduct, including fees, via oversight committees.
The central bank would then manage prudential regulation, like financial stability principles.
The gap in the old system was that banking market conduct was unregulated - so this aspect now falls within the new ambit of the FSB.
Jonathan Dixon, deputy executive officer for insurance at the FSB, said on Tuesday that the framework for its treat customers fairly project would also cover compensation practices.
He said this meant incentives should not have the outcome of treating customers unfairly, like where they encouraged quick sales upfront to ensure large and immediate commissions.
