While state control of banks such as the UK’s Royal Bank of Scotland may prove temporary, clampdowns on executive pay by now-nationalised banks could deter people from entering wealth management, causing long-term skill shortages, a senior figure in the industry warned.

When the UK government nationalised RBS – parent of Coutts, the UK private bank – as well as Lloyds TSB and HBOS, the UK government also criticised what it called excessive bonus payments, which some critics blame for helping cause the market and banking crisis.

The UK regulator, the Financial Services Authority, meanwhile, has been asked by the government to write a code of practice on executive pay although the FSA has not proposed explicit controls.

However, clampdowns on pay and bonuses, while perhaps understandable in the wake of the financial crisis, could bring a heavy cost, Richard Charnock, chief executive of Standard Life Wealth, told a conference on opportunities in private banking hosted by WealthBriefing and Lexis Nexis in London.

“If there is central interference in remuneration structures in our industry, we’ll have difficulty attracting the best brains that are available,” Mr Charnock said.

“We are going to come under pressure to change the way we reward all our people,” he said, warning that it would be a mistake for wealth firms to take the easy option of cutting costs by spending less on employee training and development.

Bonuses paid to City workers such as investment bankers have come under fire from politicians and media pundits arguing that recipients seldom suffer equivalent financial pain during a downturn, a fact that encourages reckless behaviour.

The City’s bonus culture has become a regular feature of the financial landscape in the UK. Recently, the Office of National Statistics, the UK body publishing data on the economy and society, found that 60 per cent of all bonuses came from the financial services sector, a similar share to a year ago.

At yesterday’s conference, several speakers said that wealth management, even at a time when thousands of investment bankers have lost their jobs and are looking for new work, continues to suffer a dearth of people with the right skills.  

PricewaterhouseCoopers, for example, said in a report earlier this year that skill bottlenecks were a potential drag on the industry’s growth.

“The time for amateurs to be working in this industry has changed. The talent is not there, has never been there and it has to be searched out and cultivated rather than just bought off the shelves,” Bruce Weatherill, partner, the eponymous executive consulting firm told the conference.

“You have to say that if investment bankers are the answer [to wealth skill shortages], then what is the question?” Mr Weatherill said.