The two main directors of the Financial Conduct Authority have collected a combined £157,000 in bonuses after a year in which the watchdog imposed a record £1.4bn of fines on City firms.
Tracey McDermott, who oversaw the fines, received a £65,000 bonus for the 2014/5 financial year, according to the annual report published on Thursday. She has since been promoted to director of supervision from her role running the enforcement and financial crime division.
Martin Wheatley, the FCA boss, received a £92,000 bonus. In the previous year he had not been given a bonus because of a botched briefing about life insurance – when £3bn was wiped off the value of insurers’ shares after the Daily Telegraph was told about the watchdog’s plan for a sweeping review of policies.
Last year, the Treasury received £1.4bn of fines from the FCA, mostly from a £1.1bn penalty on five banks for rigging foreign exchange markets. The fines for the financial year to the end of March 2015 were higher than those levied in the previous four years combined.
The FCA also admitted it still could not set a publication date for the results of its investigation into the collapse of HBOS in 2008. The report, which it is conducting alongside the Bank of England’s Prudential Regulation Authority, was previously promised by the end of last year.
“We and the PRA are committed to publishing the report as soon as possible but the legal process of Maxwellisation and consent can be lengthy. Maxwellisation is the process, required by law, whereby anyone subject to potential criticism is given an opportunity to see those references, comment in response and have those comments considered by the person preparing the report. Following this, we will need to obtain consent from various parties to publish in the report any information deemed confidential by law,” the annual report said.
The bonuses to the two top FCA executives took Wheatley’s total pay to £701,000 and McDermott’s to £475,000. The annual report also showed that she has now received a £45,000 bonus for the previous financial year, which had been withheld after the insurance briefing debacle.
Clive Adamson, head of supervision at the time of the botched briefings, did not receive a bonus for either of the years and left in January 2015. However, he was paid until the end of May, receiving a total of £438,000.
The tally of fines issued by the FCA was published the day after the Bank of England pointed to the potential financial instability posed by the regulator’s fines. In its half-yearly assessment of the risks in the financial system, the Bank said the impact from fines was wider than the financial hit to banks, with its agents around the UK finding evidence that small businesses were avoiding borrowing from banks because of their reputation.
While the FCA is levying record fines, it found that suspicious trading in shares ahead of takeovers – a potential sign of the scale of insider trading – had fallen to a low of 14% from 15% previously.
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