FCA board backs plans to overhaul pay despite concerns over staff morale

The Financial Conduct Authority’s board is throwing its weight behind plans to overhaul pay and conditions at the regulator, despite concerns from staff over potential cuts to bonuses and benefits.

Board minutes from a 19 August meeting, released on 29 September, show that the FCA’s executive team planned to issue a statement of support for the proposed new employment terms. It would also step up efforts to explain its consultation on reforms to employees.

“The board expressed its strong support for the proposals and encouraged the team to press ahead with developing the communications plan to prepare for the consultation,” the minutes read.

READ FCA employees fear bonus cuts could be worse than predicted

The board’s support puts it at odds with a significant number of the watchdog’s staff, who have expressed concerns about proposals that could see the FCA move from a four-tier to a five-tier rating for performance, vastly reducing potential bonus payouts on offer.

Workers discussed union representation to fight the changes, which could also include tweaks to the number of senior roles available, as well as to entitlements such as pensions and health insurance.

Senior managers are looking to allay confusion through meetings with employees after staff satisfaction decreased in recent surveys.

“The importance of effective communication of the proposals and engagement with employees was recognised and the team explained the plans that were being put in place,” the 19 August board minutes note. “The board recognised and discussed the risks inherent in the proposals but was equally aware that there were significant risks in not proceeding if the desired change in culture at the FCA was to be achieved.”

The board reviewed how performance-related pay would ensure staff collaborate and were incentivised properly.

The FCA, it was noted, “had already operated for some years with an expected distribution of performance ratings”, and that there were “many different motivators for strong performance”.

It also reviewed how performance management would work, saying that this would be “crucial” to the success of the reforms. The board added it was keen to understand what support would be available to directors, heads of department and other line managers.

The minutes show that the board discussed the case for putting “transitional maintained pay arrangements” in place.

READ Leaked FCA memo shows bosses seek to quell staff outcry as morale slumps to ‘all-time low’

The Payment Systems Regulator, a subsidiary of the FCA that regulates areas like money transfers, had raised initial concerns about how it would be affected by any overhaul, according to the board paper. Changes were made that largely addressed these, the notes of the meeting say.

A “substantial amount of work that had been carried out to develop and refine the proposals in a relatively short time,” the board said, thanking the teams involved for their efforts.

At the watchdog’s annual public meeting on 28 September, chief executive Nikhil Rathi confirmed that a consultation on remuneration and conditions had kicked off the previous week.

Rathi said the regulator’s leadership had already been revamped to strengthen its expertise in areas such as data and environmental, social and governance issues, but the consultation would help ensure the regulator could “work at pace”, and he was “confident [the proposals] will achieve a transformed FCA”.

Rathi added he was proud of the watchdog’s work, but was “clear the FCA needs to continue to adapt to deliver our objectives”.

Speaking to members of the press after the meeting, chairman Charles Randell said he wanted to look at “how we streamline our governance with clearer accountability throughout our chain”.

He noted that the FCA had already cut bonuses for its senior leadership team, and would not be paying them in future.

To contact the author of this story with feedback or news, email Justin Cash

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