Recruiters have expressed doubts over the government’s plans to give the Financial Services Authority (FSA) increased powers to curb bankers’ bonuses.

Chancellor Alistair Darling told the Sunday Telegraph yesterday the FSA would be given new powers to stop bankers receiving bonuses that “would cause instability” to the financial system.

Paul Goodman, founder and board director at Goodman Masson, told Recruiter: “It is as much electioneering as it is reality. We have got 70 days before a general election so to what extent this would get rushed into legislation is questionable. It is not a huge jump to give bankers a bashing as a vote winner.

“It would raise concerns over whether international talent would come to the UK. If the international community does not follow suit, the risk is other cities will have a competitive advantage over London.”

Philip Seager, managing director at Alan Mitchell Financial Recruitment told Recruiter: “I don’t think candidates are looking at moving abroad at the moment. I don’t think anyone believes it will come to that. It is a ridiculous suicide mission.

“If they do this, it would be an own goal. We are a service-led economy and our main service is banking, if we mess around with that, we really will end up a third world power.”

Andrew Evans, managing director of Morgan McKinley’s financial services business, says: “It’s a little premature to say that there will be a talent drain from the UK as a result of the FSA’s new bonus powers. We need to see what the detail of these new powers is and what action the FSA is likely to take in enforcing them. If bonuses are very heavily regulated in the UK compared to other financial centres, inevitably, there’s a risk that high calibre talent will look to move elsewhere, but we won’t know for sure until other financial centres announce their regulatory changes and there’s time for the dust to settle on this issue.”