It is not the role of the Financial Services Authority to deal with public outrage over the size of bonuses, according to its chief executive.
Writing in the Financial Times, Hector Sants explained that this aspect of remuneration is a moral issue and as such does not fall under the remit of a regulator.
He said: "If politicians believe it is a problem that should be remedied, they should do so using the appropriate mechanisms such as taxation. Asking regulators to provide solutions in this area is an easy sound bite that ultimately ducks the issue."
However, it is the task of regulators to step in if a pay structure is exposing a company to excessive risks, he added.
Mr Sants' comments came just before the FSA published its new code of practice on remuneration policies.
The document states that firms should not enter into contracts which provide guaranteed bonuses for more than one year.
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