The head of Britain's financial watchdog has warned that banks are already in danger of forgetting the lessons of the financial crisis.
Lord Turner, chairman of the Financial Services Authority (FSA) told MPs on the Treasury Select Committee he was worried about a lack of will to drive through reform as memories of the turmoil fade.
The chairman was speaking a day after news of a £9.6 million pay and shares package for the chief executive of part-nationalised Royal Bank of Scotland emerged. He added that there was 'very aggressive hiring going on' in the trading activities of investment banks.
Lord Turner called for an effective 'tax on size' to prevent banks from growing too big. He said higher capital requirements for larger banks would reduce the risks of failure.
Last week Bank of England Governor Mervyn King warned of tough choices ahead over the size of the banking sector - saying that if some banks were too big to fail 'they are too big'. The FSA chairman said he preferred a 'sliding scale' of capital requirements for banks depending on their size.
