The Financial Conduct Authority (FCA) has cancelled £205,000 worth of executive bonuses after a damning report found the watchdog had failed to properly regulate a collapsed firm.
But FCA employees implicated in the report are now facing calls to pay back bonuses for previous years after an investigation found “significant gaps and weaknesses” in the institution’s policies and practices.
An independent investigation was launched last year into the FCA’s handling of London Capital & Finance (LCF), which entered administration early last year. The firm had offered “mini-bonds” to retail investors, and its collapse impacted over 11,000 people who had invested around £237m.
Today, the investigation’s verdict was that the FCA did not effectively supervise and regulate LCF. It said mini-bond holders “were entitled to expect, and receive, more protection from the regulatory regime”.
In response, the FCA said it had decided to cancel 100 per cent of the bonuses for the executive committee for 2019/20. That means eight people will not get bonuses worth £205,000, the FCA said.
“We note the comments in the LCF Review which clarify that the allocation of responsibility to individuals is not a finding of personal culpability,” the FCA said.
“Nevertheless, the FCA Board has decided that discretionary pay awards for Executive Committee members which have been deferred in respect of the 2019-20 year will not be paid.”
MP says tougher action needed by FCA
However, Sky News reported that senior MPs want Megan Butler and Jonathan Davidson to repay £90,000 in bonuses awarded to them for the 2018-19 financial year after they were singled out.
Kevin Hollinrake, co-chair of the all-party parliamentary group on fair business banking, called for more action to be taken.
“It’s a damning report which clearly points the finger at the leadership of the organisation,” he told City A.M.
“In many areas the FCA is simply not fit for purpose and unless individuals are held to account for their failings this kind of incompetence and negligence will continue.
“Those responsible should be fired or at the very least have to repay the significant bonuses they have received for their years of failure of the proper regulation of LCF.”
The FCA would not comment on the possibility of executives paying back bonuses.
Chair of the Treasury Committee of MPs Mel Stride said: “This report exposes a litany of failings at the FCA.
“We will look at the detail of this important report thoroughly and the Committee plans to take oral evidence on it, as well as on any wider implications for the regulatory regime, in the New Year.”