40% bonus rise for FSA executives despite banking collapse

Staff at the Financial Services Authority (FSA), which admitted failing in its duty to regulate the banking system, have received a 40% increase in their bonuses.

A freedom of information request revealed that the bonuses, paid out last month, amount to £19.7m – a 40% rise on payments made last year.

One FSA official was paid £90,000 and 10 staff received awards of £50,000 or more. The 2,500 staff at the watchdog were paid bonuses averaging nearly £8,000.

At the authority 174 staff were shown to receive six-figure salaries, and on average these executives received bonuses of £22,485. Only three received no bonus at all.

Don Foster, the Liberal Democrat MP who requested the information, said: “Given the crisis we have seen in the financial services industry, I find it utterly bizarre that the FSA is actually paying bonuses to anyone this year.

“Bonuses should only be paid when someone has performed beyond the call of duty. Many people are concerned that the FSA has failed to perform the basic functions it should have done.”

John Thurso, a member of the Treasury select committee, added: “If they have brought in better people and they are doing a good job then that would be reasonable.

“At a time when pay restraint is being urged, it sends a dubious message unless the FSA can demonstrate that bonuses are fully merited and fully justified.”

A spokesman for the FSA said: “It is generally acknowledged that the FSA needs to attract and retain high-quality staff to deliver better regulation.

“In that context, we need an overall compensation policy that is credible and fair. Any such structure must have a variable element so that we can recognise individual performance appropriately.

“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 FSA is due to implement a new code of conduct for the banking industry in the autumn.

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