Bank of England Governor Mark Carney said the UK already had a "hard touch" regime in relation to bankers' pay and criticised the EU cap on bonuses.
Mr Carney said the cap would partly reverse the changes that have been made to be able to recover bonuses from bankers.
It takes back some of the advantages of the approach that we have had because it will incentivise more cash compensation today - exactly the type of problem we had before - that we can't claw back.
We would rather see more deferral, more equity [share-based payout] and this ability to take it back when those risks come to light.
He also denied the suggestion that regulators had "dropped the ball" over bankers' pay.
More top news
Erin Sandilands was told to apply more makeup, wear a skirt or put her hair down because "it's better for the punters".
Theresa May will make her pitch to lead the Conservative party today, 90 minutes before long-time favourite Boris Johnson.
Cool temperatures and breezy conditions with a top temperature of 20 Celsius (68 F).