It’s down to regulators to reform the bonus system. And given regulators are powerless to intervene, reform looks as likely as a small village in Hampshire becoming the financial centre of the UK.

Regulators are certainly making scary noises. From Mervyn King’s anti-bonus diatribe, to Sir Callum McCarthy’s call for banks to emphasise long-term performance, snarls and grunts about bonuses have been emanating from the regulatory corner for several months.

However, individual regulators are powerless to make a difference. Mervyn and Sir Callum can gnash all they like, but unless other regulators chomp alongside them, banks will simply resituate themselves in localities amenable to their need to intermittently rain cash on top performers.

If regulators are to force bonus reform, they will therefore need to do so globally. But there is no global financial services regulator. And given three large hurdles barring its conception, birth of such a mega-regulator looks unlikely.

The first hurdle is legislation. A global regulator would mean combining existing local regulations. “That would be extremely difficult, if not impossible,” says Chris Rexworthy, former head of the wholesale firms division at the FSA.

The second is consensus. The US is already having problems building consensus between the Treasury, the President and Congress on the intricacies of a subprime rescue package. Reaching agreement on global financial services regulation would be the equivalent of throwing another 109 stakeholders into the mix.

The third is regulatory protectionism. “Individual country regulators are much too protective of their own patch to allow for a global regulator,” says John Tattershall, chairman of the financial services regulatory practice at PricewaterhouseCoopers. “At the end of the day, failure of a local bank will always be blamed on the local authorities, which makes it difficult for them to cede control.”

In the absence of a global regulator, the world must make do with guidance from the likes of the Basel Committee on Banking Supervision, the International Organisation of Securities Commissions (IOSCO), and the Financial Stability Forum. But without global enforcement, one country’s interpretation of their guidance is likely to differ from another’s – as demonstrated by variations in the implementation of MiFID and Basel II.

With regulators unable to enforce bonus reform, the responsibility is passed to banks. But individual banks have no interest in implementing a system that could mean them losing staff to others or to hedge funds.

For this reason, bonuses look safe. But banks and bankers cannot afford to be too complacent. Extreme times call for extreme solutions: in World War II, the Bank of England was evacuated to Hurstbourne Priors, a small village not far from Andover in Hampshire.