The FSA shelled out nearly £20m in bonus payments to its staff this year, a 40% increase on last year, with some staff pocketing an extra £50,000 on top of their salary. The much-maligned regulator insists that it has to pay more to attract a better quality of staff. But unless these bonuses are entirely unrelated to performance (which seems improbable), it’s a bit hard to see how the FSA can possibly justify them – when the banking regulator fails to prevent a once-in-a-lifetime banking crisis, surely that counts as a pretty bad year…?
The figures, obtained by Lib Dem MP Don Foster under the Freedom of Information Act, show that working at the FSA can be a pretty good gig. 174 FSA staff got paid at least £100,000, while also taking home an average bonus of £22,845. Ten of them even got a bonus of more than £50k, while just three failed to get any bonus at all (we can only wonder what this trio must have done to deserve that). MPs – no doubt keen to see someone else take the heat for a change – have been queuing up to put the boot in, with Foster describing it (not unreasonably) as ‘utterly bizarre that the FSA is actually paying bonuses to anyone this year’.
However, the regulator seems unabashed, arguing that it can’t be expected to up-skill its workforce unless it pays people accordingly. ‘To suggest that we should in effect cut this element of the FSA's total remuneration when we are being urged to upgrade our skills base makes no sense,’ the watchdog huffed. In some ways we should have known – back in January, Lord Turner told MT that he planned to boost bonus structures so they were more akin to those in the City. We just didn’t realise he meant restrospectively (although even now, these bonuses are peanuts compared to the kind of wedge a banker could take home).
As Philip Delves Broughton argues in this month’s MT, chasing ill-conceived bonus targets hasn’t exactly worked out well for UK plc lately, particularly in the City. It’s the FSA’s job to regulate that – but how can it expect to be trusted with that task when it can’t apply the same strictures to itself? It can hardly dispute that it’s had a rotten year, after the barrage of criticism it's received for its role (or lack thereof) in the banking crisis. So paying out higher bonuses – which are supposed to be a reward for out-performance – seems odd, to say the least. Perhaps, like the City, the FSA needs to think about reforming the way it sets its targets, or it's going to keep getting in hot water like this.
And incidentally - stories like this do make us wonder why Gordon Brown thinks an independent watchdog is likely to be the best monitor of MPs’ expenses...
In today's bulletin:
Vauxhall fears as GM becomes Government Motors
Who watches the watchdog? FSA hikes bonuses by 40%
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The Sharp End: The pawnbroker's chain
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