Financial Services Authority (FSA) staff are in line for £33m of bonuses and pay rises this year, despite the body being severely criticised for not doing enough to prevent the banking crisis.
The financial services regulator said yesterday it was raising staff bonuses by 2.5% to 15% this year, requiring it to pay out £23m, according to the Times. A further £10m will give pay rises to staff to make them more comparable with the external market for financial services skills. Base pay will be lifted by 3.3% on average, the newspaper said.
The regulator’s Business Plan, also out yesterday, said the body would launch a new reward strategy this year to provide better links between staff skills, contribution and remuneration.
It said: “During 2009/10, we will start implementing our new reward strategy which aims to move staff to a common reward platform. Our aim is to ensure a more equitable distribution of total reward spend and to provide increasingly transparent links for staff between skills, contribution and reward.
“The salaries we offer must be comparable with the external market for relevant financial services skills.”
Plans for potentially bigger bonuses and pay top-ups are part of a talent management strategy and come just 24 hours after the FSA’s deputy chairman Sir James Crosby resigned following allegations that he sacked a whistleblower when he ran banking giant HBOS.
A final decision on payments depends on the approval of the chairman of the FSA board remuneration committee – a position now vacant thanks to Crosby’s departure. It is likely the bonsues will be paid in cash immediately. However, this is contrary to the advice of the regulator towards banks that deferred payments spread among shares or cash was best practice in the current climate.
The FSA’s Financial Risk Outlook 2009, out on Monday (9 Februrary), warned: “Significant cash bonuses which are not deferred can encourage employees to adopt a short-term approach which expose companies to risks which in the long term prove unacceptable. Deferred bonuses, in stock or cash, provide employees with incentives to take a longer-term approach.”
The FSA was unavailable for comment this morning.