Britain’s financial regulator, accused of failing “top to bottom” after a series of scandals, has paid bonuses of more than £ 125 million to its staff since 2016, the Observer can reveal.
The activists said that payments in the Financial conduct authority (FCA) were an “absolute insult” to savers who had lost their life savings due to systemic failures of the regulator.
FCA chief Nikhil Rathi is now proposing to remove the bonuses after two independent reviews found the regulator had acted too slowly to protect consumers. He said the payments “had not been effective in boosting individual or collective performance.”
Details of the bonus payments earned 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 CEOs.
In the year to March 31, 2021, £ 19.8 million in bonuses were paid out, with average payouts of around £ 5,300 for prize recipients.
These are among the largest bonus jackpots ever given out by a government department or quango.
Gina Miller, a business activist and co-founder of the True and Fair Campaign, which calls for a financial reform package to benefit consumers, said: “These payments are an absolute insult to people who have lost their life savings or had its decimated lives 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 compliance and regulatory rigor. It is incredible in that context to give these bonuses. This is an organization that has failed from top to bottom. “
Approximately 4,200 employees work at the FCA, which is funded by the financial firms it regulates. It was led by Andrew Bailey, Governor of the Bank of England, from July 2016 to March 2020.
The watchdog was criticized in a damning report by former appeals court judge Dame Elizabeth Gloster last December on her failure to effectively supervise and regulate minibond issuer London Capital & Finance (LCF). About 11,600 investors lost savings of up to £ 237 million when LCF entered administration in 2019.
Two of the FCA’s top executives, Megan Butler and Jonathan Davidson, faced calls from MPs to refund the £ 45,000 bonuses paid each in fiscal 2018-19 after they were named in the Gloster report.
The watchdog was criticized in another independent review published in December for ineffective regulation on the collapse of the Connaught Income Fund in 2012. The FCA said at the time it was “deeply sorry” for the mistakes that had been made.
The watchdog has also faced criticism for not intervening before the collapse of Neil Woodford’s Woodford Equity Income Fund of £ 3.1bn. It closed in October 2019 with huge losses for tens of thousands of investors.
In an FCA consultation document that was distributed to staff, Rathi said it was “increasingly difficult” to justify bonus payments after reviews of the LCF and Connaught funds found that the regulator had acted too slowly to protect consumers.
He wrote: “This is particularly true when bonuses are paid to the vast majority of staff and not just those who have performed exceptionally well.”
The FCA said its CEOs had declined to be considered for performance bonuses in 2020-21 and it had already been decided that they will not be eligible for performance rewards in the future. The FCA payments and benefits consultation runs until December 20.