<strong>Q.HOWWILLTHENEWRULESAFFECTBANKERS&rsquo; PAY<br /></strong>A.A code of conduct on bonuses published by the Financial Services Authority (FSA)in February this year said firms needed to ensure that remuneration policies did not expose them to excessive risk. It set out the proportion of bonuses that needed to be deferred and how long deferrals should be, how much should be awarded in shares and how much in cash. The FSA suggests deferring at least two-thirds of the bonus in instances when it is a significant component of overall pay. Sign-on bonuses are outlawed but crucially none of the rules mention any sort of cap on pay or bonuses. <br /><strong><br />Q.WHAT ARE THE NEW REGULATIONS?</strong><br />A.The new proposals are designed to <br />reinforce the existing code of conduct. <br />A Treasury spokesman said they will act as a &ldquo;backstop&rdquo;to&nbsp; existing rules under which, if a bank &ldquo;wanted to recruit someone at all costs&rdquo; and paid that new employee a sign-on bonus in the first year of their contract, The bank could face a fine for breaching the rules, but the contract would still stand. Under the new rules, the FSA would&nbsp; be able to step in and &ldquo;tear up&rdquo;that contract. The FSA could also impose <br />suspensions on some forms of business.<br /><br /><strong>Q.WHEN WILL THE REGULATIONS COME INTO FORCE?<br /></strong>A. The Treasury hopes to have the new rules in place before the next general election, <br />if the bill passes through Parliament before 3 June, the latest date on which a poll can be held. Others are not so sure this bill will ever reach the statue books.<br /><br /><strong>Q.WHO WiLLthe RULESAPPLYTO?<br /></strong>A.The new rules will apply to all retail and investment banksregulated by the FSAin the UKincluding partly state-owned Royal Bank of Scotland and Lloyds Banking Group as well as Barclays and HSBC. They will also apply to the UKsubsidiaries of global investment banks like Goldman Sachs. The Treasury spokesman said overseas banks which only have so-called &rdquo;branches&rdquo; of their operations in the UK, such as French banks BNPParibas and Societe Generale and Germany&rsquo;s Deutsche Bank, were not officially affected by the new rules, although all those banks had agreed to adhere to the regulations, the spokesman said.<br /><br /><strong>Q.HOW WILL THE FSAENSURE BANKS STICK TO THE RULES?<br /></strong>A.The Treasury spokesman said the FSA <br />will carry out random checks on banks<br />to ensure they are complying with the rules.