Outrage over £125m bonuses for staff at UK’s ‘failing’ financial watchdog

Financial Conduct Authority accused of failures ‘from top to bottom’ after a string of scandals

Britain’s financial regulator, accused of failing from “top to bottom” after a string of scandals, has paid out bonuses of more than £125m 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 life savings because of the regulator’s systemic failings.

The FCA boss Nikhil Rathi is now proposing to scrap the bonuses after two independent reviews found the regulator had acted too slowly to protect consumers. He said the payouts had “not been effective at driving individual or collective performance”.

Details of the bonus payouts obtained by the Observer reveal £125,529,590 has been paid out in bonuses at the watchdog since 2016, including bonuses worth up to £45,000 each for executive directors.

In the year to 31 March 2021, £19.8m in bonuses was paid out, with average payouts of about £5,300 for those receiving awards.

These are among the biggest 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 life savings or have had their lives decimated because we have a regulator which isn’t fit for purpose.

“We have seen over the last five years some of the biggest financial scandals due to a lack of enforcement and regulatory rigour. It’s unbelievable against that backdrop to award these bonuses. This is an organisation which has failed from top to bottom.”

Gina Miller
Gina Miller said: ‘It’s unbelievable to award these bonuses.’ Photograph: Roger Askew/Rex/Shutterstock

About 4,200 staff work at the FCA, which is funded by the financial firms it regulates. It was headed by Andrew Bailey, the Bank of England governor, from July 2016 to March 2020.

The watchdog was criticised in a damning report by the former court of appeal judge Dame Elizabeth Gloster last December over its failure to effectively supervise and regulate the mini-bond issuer London Capital & Finance (LCF). About 11,600 investors lost savings of up to £237m 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 repay bonuses of £45,000 each paid in the 2018-19 financial year after they were named in the Gloster report.

The watchdog was criticised in another independent review published in December for ineffective regulation over the collapse of the Connaught Income Fund in 2012. The FCA said at the time it was “profoundly sorry” for the mistakes that had been made.

The watchdog has also faced criticism for failing to intervene before the collapse of Neil Woodford’s £3.1bn Woodford Equity Income Fund. It was shut down in October 2019 with heavy losses for tens of thousands of investors.

In an FCA consultation document that has been circulated to staff, Rathi said it was “increasingly difficult” to justify the bonus payouts after the LCF and Connaught fund reviews found the regulator had acted too slowly to protect consumers.

He wrote: “This is particularly so 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 declined to be considered for performance bonuses in 2020-21 and it had already been decided they will not be eligible for the performance awards in the future. The FCA pay and benefits consultation runs until 20 December.

Contributor

Jon Ungoed-Thomas

The GuardianTramp

Related Content

Article image
Finance watchdog ‘changed scheme to avoid paying compensation’
Financial Conduct Authority investigated after string of scandals

Jon Ungoed-Thomas

14, Nov, 2021 @8:45 AM

Article image
Neil Woodford fund was sailing close to the wind, watchdog says
City regulator tells MPs the investment manager broke spirit of rules before crisis

Richard Partington

25, Jun, 2019 @6:14 PM

Article image
Gina Miller urges FCA investigation into fund management 'price fixing'
Businesswoman and investment campaigner says there is no genuine competition among fund groups

Patrick Collinson

06, Mar, 2017 @3:52 PM

Article image
Neil Woodford loyalists pay dearly for stock-picker's style drift
Winding up of flagship fund should also be a big lesson for Hargreaves Lansdown

Nils Pratley

28, Jan, 2020 @6:35 PM

Article image
Neil Woodford needs permission to set up new firm, says FCA
City regulator still investigating collapse of fund manager’s previous business

Richard Partington Economics correspondent

17, Feb, 2021 @11:20 AM

Article image
'One of the biggest financial scandals around': FCA criticised over LC&F
Calls for investigation into financial watchdog after London Capital & Finance collapses with £236m of investors’ money

Patrick Collinson

29, Mar, 2019 @6:00 AM

Article image
David Davis linked to City trader fined for insider dealing
Brexit secretary supported banker Ian Hannam in court after accepting lucrative post at his company

Jamie Doward

12, Aug, 2017 @7:45 PM

Article image
Philip Green's Topshop rescue deal still stands a chance | Nils Pratley
Intu may just say no to Arcadia’s CVA rent cuts but other waverers may fall into line

Nils Pratley

11, Jun, 2019 @6:12 PM

Article image
Watchdog to investigate Neil Woodford fund suspension
FCA intervention follows questions about oversight amid rush of withdrawals from troubled flagship fund

Kalyeena Makortoff , Julia Kollewe and Phillip Inman

18, Jun, 2019 @4:56 PM

Article image
UK taxpayers face £120m compensation bill for LC&F scandal
Government announces payouts for almost 9,000 people who invested in defunct London Capital & Finance

Rupert Jones

19, Apr, 2021 @5:28 PM