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Cost of closed book probe soars to £3.8m; Martin Wheatley loses £115k bonus

The FCA has spent a total of £3.8m on carrying out the inquiry into where it wrong on announcing its review of closed book business. 

Following the findings of the inquiry, the regulator has confirmed that chief executive Martin Wheatley, director of supervision Clive Adamson, director of communications Zitah McMillan and director of markets David Lawton will not be receiving a bonus for 2013/14.

Clifford Chance partner Simon Davis has today published his report into how the FCA bungled its announcement that it was to carry out a thematic review into closed books. 

The report is critical of senior management’s role of the episode in March, where a briefing to the Daily Telegraph and the subsequent report sent insurers’ share prices tumbling.

The regulator sets out the cost of the inquiry as follows:

FCA closed book costs.jpg

Including VAT, the total cost of the inquiry is £3.8m.

Davis found that Wheatley was disadvantaged due to the failures of Adamson, Lawton and McMillan who failed to escalate the issue to him in time.

Following the report’s findings, the FCA’s non-executives have decided the four senior managers will not receive a bonus for this financial year. 

Wheatley has lost a maximum bonus of £115,000, while Adamson has lost a bonus of up to £72,750. Adamson resigned earlier this week and will be put on six months gardening leave from January. 

Five other members of the executive committee have had their bonuses reduced by 25 per cent. The regulator says “other disciplinary action has been completed as appropriate”.

The FCA says: “We are grateful to Mr Davis for the care and detailed consideration he has taken with this comprehensive report.

“As a regulator we recognise we must hold ourselves to the highest standards and we have learned a great deal from this report. We will do our utmost to ensure that a situation like this will never happen again.”

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. E L Wisty (an only twin) 10th December 2014 at 1:01 pm

    Let’s see if I’ve got this right.

    The FCA cock up and the markets falls by billions in a single day. They commission a report that costs £3.8 billion, and which is critical of the organisation and individuals.

    Yet, no one loses their job.

    Unbelievable.

  2. What in heavens name do these people do to get bonuses of this level. Wheatly and all others should not get a bonus ever as they do not produce anything. Do they have targets to get rid of advisers or the amount of fines they issue. Just think it is our money that they spend what a disgrace No doubt salaries will rise to counter act the bonus loss

  3. Why don’t the executives pay the additional cost instead of advisers.

  4. This is an absolutely staggering cost !!! How do you get onto this gravy train please, I`m clearly in the wrong job.

  5. We cock up – you pay for the cock up.

    Gizza job as yosser would say.

  6. Next we will have an inquiry into why it was necessary to spend £3 million for 3rd parties to come up with this report.

  7. Yes thank you for spotting the error of our ways, but please do not darken our doorstep again… we were of the opinion that as we were regulators we could simply get away with it… drat and double drat!

  8. So Mr Wheatly looses £115k Wow – some hit! Yet again I ask how are these bonuses calculated? This is not a for profit entity so how can you even contemplate a bonus? If the employee is worth more money pay it, but don’t insult us by awarding fatuous ‘bonuses’. A bonus is a reward for making a significant contribution to increased profits – not for doing the job.

    Anyway may we now hope that Mr Wheatley will now feel some empathy with those whom his organization zaps? May we hope that a somewhat more judicious fines regime will now ensue? Or will he be so pissed that he ups the ante?

  9. I cannot understand how an enquiry can cost £3.8m in the first place and why someone above the FCA is not hearing alarm bells like the rest of us.

    We are constantly informed of these large spends whether for this enquiry or office board meetings and yet IFAs are going out of business due to the increasing costs the regulator imposes.

    Once again as I said back in July in response to the cost of FCA meetings, why can the FCA not provide a full breakdown of expenditure of the fees received from firms in the UK? Any other business has to breakdown an invoice or bill but the FCA seem exempt from needing to justify costs.

    How kind of Mr Adamson to resign and have 6 weeks garden leave over the Christmas break. No doubt again paid.

    Heads turning in our office this morning at this article.

  10. Let me get this right. …..parliament doesn’t fund the FCA does it…

    so they cock up and we ( the advisers) pay for their misdemeanors through annual fees..

  11. I assume Santa wont be calling their houses this year

    If i have a successful complaint against me I have to pay up – so why don’t they?

    What happened to TCF – the FCA should remember that we are their ‘customers’ as well!!!

  12. E L Wisty, in fairness it was only £3.8 million, not billion.

  13. Did the FCA get a fee agreement in advance agreeing to the £1 million fee and the £2.04 million for the report?

  14. E L Wisty (an only twin) 10th December 2014 at 2:27 pm

    First of all, let me correct my earlier comment – the report only cost £3.8 million …. not billion as stated by me!

    In any event, this is adding insult to injury. Furthermore, the FCA should be confirming the disciplinary action taken, and whether it was more than just a slapped wrist. If not, why not?

  15. The shear arrogance of the FCA is breath taking. What double standards!

    I have paid 3.8 million to find out what my masters did wrong (they wouldn’t just own up), and now this slap in the face. What does someone have to do to lose their job?

    As for the one who resigned in shame – gardening (paid leave) for 6 months!

    Bonuses cut by 25%? Why do they get bonuses anyway? What are they based on?

    Come on Martin, what about transparency on charges and TCF. We should know what the targets are and how the bonus is conjured up.

    If only I had gone to the right school, I would be aboard this corporate merry go round where the price for failure is a reduced unearned bonus and no accountability…

  16. That was my whole point about us (the advisers) paying for their misdemeanors.

    In total I pay the £3.8million through fees along with my fellow advisers and what about the cost to the industry/ investors as a result of the leaked information to the telegraph itself that sent the value of their investments down. It would only take some bold investor or group of disadvantaged investors prepared to take them on to take them on and put in a claim for the losses incurred as a result of their ineffectiveness in taking hours to deal with the issues they created on that day. The cost as EL WIsty stated it could then really run into billions

    what about Wheatley then…. this did happen on his watch after all..and as the man at the top the buck falls on him, whether he was somewhere else at the time or on his lunch break. BP boss Lord Brown was a very effective CEO but he didn’t hang around when BP’s misdemeanors occurred .

    Now If I cock up my clients investments as a result of my actions or ineffectiveness I wouldn’t just be out the door… I’d be behind bars and not the one with drinks

    Shame about his £110,000 bonus sanction though .. Swan off Christmas Dinner now Marty?I’ll save you a turkey leg.

  17. As if the legal bills alone aren’t outrageous enough, just what in hell’s name is the justification for spending £60,000 on “Strategic Communications Advice” and £50,000 on IT support? They’re yet more examples of the FCA throwing to the wind OPM as if it were confetti. So much for Martin Wheatley’s claim that the FCA was going to be “a very different animal from its predecessor”.

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