Outrage over £125m bonuses for staff at UK’s ‘failing’ financial watchdog | Financial Conduct Authority
The British financial regulator, accused of having “failed from head to toe” after a string of scandals, has paid out bonuses of more than £125 million to its staff since 2016, The Observer can reveal.
Campaigners said the payouts at the Financial Conduct Authority (FCA) were an “absolute insult” to savers who had lost their savings due to the regulator’s systemic failings.
FCA chief Nikhil Rathi is now proposing to cut the bonuses after two independent reviews found the regulator had acted too slowly to protect consumers. He said the payouts “hadn’t been effective in boosting individual or collective performance”.
Details of the bonus payouts obtained by the Observer reveal that £125,529,590 in bonuses have been paid to the watchdog since 2016, including bonuses worth up to £45,000 each for executive directors.
In the year to 31 March 2021, £19.8 million in bonuses was paid out, with average payouts of around £5,300 for those who received prizes.
These are the largest bonus pots ever handed out in a government department or quango.
Gina Miller, the business activist and co-founder of the True and Fair Campaign, which is calling for a package of financial reforms to benefit consumers, said: “These payouts are an absolute insult to people who have lost their savings or their lives have been decimated. because we have a regulator that is not fit for purpose.
“We have seen some of the biggest financial scandals in the last five years due to a lack of enforcement and strict regulation. Against that background, it is unbelievable to award these bonuses. This is an organization that has failed from head to toe.”
Gina Miller said, “It’s unbelievable to award these bonuses.” Photo: Roger Askew/Rex/Shutterstock
About 4,200 employees work at the FCA, which is funded by the financial companies it regulates. It was led by Andrew Bailey, the Governor of the Bank of England, from July 2016 to March 2020.
The watchdog was criticized last December in a damning report by former appeals court judge Dame Elizabeth Gloster over its failure to effectively oversee and regulate the mini-bond issuer London Capital & Finance (LCF). About 11,600 investors lost savings of up to £237 million when LCF went into administration in 2019.
Two of the FCA’s most senior executives, Megan Butler and Jonathan Davidson, faced calls from MPs to refund bonuses of £45,000 each paid in FY 2018-19 after being named in the Gloster report .
The watchdog was criticized in another independent review published in December for ineffective regulation over the 2012 collapse of the Connaught Income Fund. The FCA said at the time it was “deeply sorry” for the mistakes it made.
The watchdog has also been criticized for failing to intervene before the collapse of Neil Woodford’s £3.1 billion Woodford Equity Income Fund. It was shut down in October 2019 with heavy losses for tens of thousands of investors.
In an FCA consultation paper distributed to staff, Rathi said it was “increasingly difficult” to justify the bonus payouts after the LCF and Connaught fund assessments showed the regulator had acted too slowly to protect consumers.
He wrote: “This is especially true when bonuses are paid to the vast majority of staff and not just those who have performed exceptionally.”
The FCA said its executive directors had refused to qualify for performance bonuses in 2020-21 and it had already been decided that they would not be eligible for the performance bonuses going forward. The FCA wage and benefit consultation will run until December 20.