Darling warns against complacency

LONDON (Reuters) - Chancellor Alistair Darling warned bankers against complacency and returning to excessive risk-taking in an interview with the Independent, adding some needed to be "brought back to earth."

"If they go back to the way they were... without asking themselves over and over again whether they understand what they are doing, that would be disastrous for them and the rest of the world," he told the paper.

"There are people who are too complacent in my view. They need to be brought back to earth," the paper quoted him as saying in an early copy of its Friday edition.

Darling also said the Financial Services Authority would be allowed to extend its regulatory remit under new proposals to be published next week, which could draw hedge funds into the FSA's net.

He said both the FSA and the Bank of England would be given more powers under the new government financial regulation proposals, confirming comments from Treasury Minister Paul Myners on Tuesday.

A turf war appears to have opened between the FSA and the central bank over who would get more powers under the new proposals, with Bank governor Mervyn King saying last week he had not been consulted on the reforms.

"It is not a turf war," Darling said in the interview. "It is a question of ensuring they both do the job they are set up to do and both do it effectively.

"They are not competing with each other. They are complementary," the paper quoted him as saying.

(Reporting by Victoria Bryan, editing by Leslie Gevirtz, Bernard Orr)