finance

Britain's financial watchdog bosses take pay cut after LCF report



© Reuters. FILE PHOTO: The logo of the new Financial Conduct Authority is seen at the agency’s headquarters in the Canary Wharf business district of London

LONDON (Reuters) – Executive committee members of Britain’s Financial Conduct Authority face pay cuts and no bonuses in future following a highly critical report into the collapse of London Capital & Finance (LCF) investment fund, the FCA’s chair said on Monday.

“We decided that consequences that flow from this should be collective,” Charles Randell told parliament’s Treasury Select Committee.

Current Bank of England Governor Andrew Bailey had been chief executive of the Financial Conduct Authority when LCF collapsed in January 2019 leaving more than 11,000 investors with losses of up to 237 million pounds ($330.64 million).

An independent report last year said Bailey and the FCA’s executive committee were responsible for deficiencies that led to LCF’s collapse.

The report singled out executive committee members Jonathan Davidson and Megan Butler for specific failings.

Davidson is due to leave the watchdog shortly. Butler is still on the executive committee, but in a new role in charge of the watchdog’s internal transformation.

The Treasury Select Committee’s Chair Mel Stride asked Randell why Butler was still in such a responsible role at the watchdog, selected after an internal competition of just two candidates.

Randell said the FCA board did not believe that the mistakes that Butler made and acknowledged amounted to serious culpability and therefore a need to ask her to leave.

Randall said the FCA had achieved an “outstanding performance” in the face of COVID-19, but executive committee members would not be paid a bonus in the current financial year.

Bonuses for the previous financial year were already scrapped.

Randell said that going forward, executive committee members will not be paid a bonus and the watchdog will reduce higher pay packages and the average level of executive pay.

($1 = 0.7168 pounds)

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