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Nic Cicutti: Frivolous spending exposes an out-of-touch regulator

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What is it about regulators that they like wasting money on frivolities? Back in the mid-to-late 1990s, I received a tip-off that staff and their spouses at the Personal Investment Authority’s office in Edinburgh had all been flown down to London for the watchdog’s Christmas party near Canary Wharf.

The PIA confirmed the story, adding that it offered colleagues working in its two key regulatory hubs the opportunity to get to know each other in a more social setting. This would allow them to work together more effectively in future. As for their spouses, well, it would have been churlish to just bring the staff down.

Fast-forward 15 years and, according to a superb little story by Devraj Ray in a recent issue of Money Marketing, it transpires the FCA paid almost £15,000 for an away day and overnight stay for its 19 board members at a five-star hotel in Hertfordshire last year.

Don’t get me wrong, I can see the value of meeting outside the confines of your own office building. I know it can help participants to focus on the particular task at hand without other day-to-day distractions.

Even so, Premier Inn or Best Western have special conference centres at many of their hotels all over the country. They have dedicated teams of staff skilled at providing everything needed by delegates and their room rates are a fraction of those charged by the Grove Hotel.

As if that weren’t enough, over the past five years the FCA and its predecessor the FSA have spent £200,000 in flowers and plants for its offices in Canary Wharf and Edinburgh, as well as “high-profile events”.

If I read the Money Marketing story correctly, it looks like the FCA, and the FSA before it, has 300 plants in their offices. The main cost, apart from flowers for various events and other supposedly strategic locations, is in the hire and maintenance contract for the plants themselves. Broken down, it looks like several pounds per plant per fortnight.

Last week I spoke to someone who, ironically, provides such a service for the offices of a London-based fund management firm and he tells me: “The plants and even the containers don’t actually belong to that company. We supply and maintain them.

“We go in and feed, water and clean all the plants and the containers. Any dead leaves are removed and failing plants are changed as part of the contract.

“In this case we usually go in every week. In some offices we go in twice a week. We charge about a fiver per visit for every plant display.”

As I write this, I’m trying desperately hard to avoid a sense of synthetic rage over this issue. Again, I understand why an organisation would want to have plants in its offices.

Research shows they lower workplace stress and enhance productivity. One study in the US found that participants were 12 per cent more productive and less stressed than those who worked in an environment with no plants.

Separate research from Norway investigated the amount of sick leave among staff and compared it with the amount of plants they could see from their desk. The more plants they could see, then the less self-reported sick leave there was.

The same research also showed that plants were able to lower fatigue, prevent dry throats, headaches, coughs and dry skin among office workers.

But what it looks like to me is an organisation that starts with a useful insight into how to enhance office productivity and then takes it to a stupid level.

Many years ago, in one workplace I was at the company gave us the chance to brighten up our office environment. Each team was offered a sum to buy some plants – as long as we maintained them ourselves. Inevitably, some teams made a hash of the experiment. But others thrived.

In our team, the maintenance job was taken over by an old boy. When he went on holiday, someone else took over. When he retired a year later, the next “volunteer”, while not as dedicated, managed to keep them alive for the next 18 months without problem. I left before that experiment ended.

It seems to me that the FCA, and the FSA before it, suffers from two problems. The first, in relation to plants but probably lots of other, far more important matters also, is that it assumes people are incapable of making rational decisions over the simplest things and need to be spoon-fed. Yet by disempowering them it actually makes that scenario more likely to happen.

The issue of its board meeting concerns me more. What it implies is a group of people arrogantly lost in a world where an entitlement to a life of luxury is simply taken for granted. For them, a £500-a-night stay in the Grove Hotel, with its 300 acres and 18-hole golf course, is entirely natural.

They clearly don’t understand why the rest of us who, when in need of a meeting room, would be more likely to call Travelodge or a Premier Inn, might query their spending decision.

For a regulator to be so out of touch with the people it watches over, never mind the general public, is actually rather frightening.

Nic Cicutti can be contacted at nic@inspiredmoney.co.uk

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. The FCA is totally out of touch . To randomly spend our money the way they have is a disgrace. Will any one do anything about it of course not. The FCA does not have any body looking over its shoulder so it will keep doing what it likes

  2. ” I’m trying desperately hard to avoid a sense of synthetic rage over this issue.”

    Nic, I hear you, the difference between you and I is I have to pay them no matter what if I want to earn a living in this profession. You earn it by writing about it. I’m pretty sure journalists don’t need to be licenced, their financial status scrutinised and their every professional decision having lifelong potential financial consequences. Nor must they pay a body for the right to ply their trade.

    Even as i write this I sometime wonder why we do what we do!

  3. Dear NIc

    It is actually uplifting when a journalist and observer such as you actually points this out. It would guess that if anyone sufficiently senior at the Regulator reads this it might actually make a difference.

    What you also missed is what the spend on ‘art’. I believe that too is a scary number, but I guess if the have bought wisely (fat chance?) it might actually be an asset which could be sold.

    However in both cases what I don’t understand is why staff can’t buy their own plants and look after them – as happens in so many other offices who have to earn their own money. Moreover with the number of employees why not just ask their children to produce paintings which they could then display – and save the outlay?

    Is it unreasonable to expect that those who regulate all matters financial show an appreciation of economy and carful husbandry of money?

  4. Not wishing to blow sunshine up your backside Nic (probably welcomed with the weather of late !) but thank you for the acknowledgement !

    The very last line;” For a regulator to be so out of touch with the people it watches over, never mind the general public, is actually rather frightening” is the most telling and a great epitaph for their tombstone ?

    Still what do you expect from a guano quango who sets and spends its budget as it pleases ? and when it is questioned some nameless; (insert your own words) declares its value for money !! .

    Priceless !!!!

  5. Nic, I don’t wish to sound surprised but this is a very good article!

    Just one observation. Nic says that the FCA are out of touch with the people they watch over. I would suggest that they are, in fact, in touch with the majority of the people they watch over. Advisers are a minority compared to banks, fund companies and insurers. Having worked for these entities in the past I don’t see the FCA being out of kilter with what I’ve seen. The only difference, of course, is that the watched aren’t spending other people’s money.

  6. Nice article Nic.

    £200,000 on plants in Canary Wharf HQ?? it must look like the Eden Project!

  7. As I see it there are two aspects that reek of anchovy.

    The first is that nobody begrudges the regulator holding meetings, outsourcing tasks and generally behaving like a normal company. The stench emanates from the fact that it has a duty of care to the industry to not waste money it has exacted by way of fees and levies and to book The Grove rather than a far cheaper hotel resonates of contempt.

    My son worked at The Grove and the cost is prohibitive which explains why the England football team and Tiger Woods choose and can afford to stay there. The FCA is not a company answerable to its shareholders but it is a body with a duty to its stakeholders.

    The second is that the history of the regulators shows that they pay lip service to their own internal rules and cost restrictions when it suits yet conversely find fault with the industry over what by comparison are trifling matters.

    The FCA has to earn respect unless it would rather suffer contempt. An understanding of the behaviours that are sure to irritate the industry would be a good starting point.

  8. Thank-you Nic. As a small IFA, living ‘up norf,’ I sometimes wonder whether it is just my conservative ways and that all is fit, well and prosperous in the bigger world in and around the Square Mile.

    From your article, it appears that this is not the case and my thinking is more in tune with others during this sustained period of austerity.

    As I have stated previously, all of these additional overheads ultimately come at a price for the consumer. If we have to pay for it, unfortunately so must they, that is how business works; costs and overheads must be passed on! I don’t see many of my clients being too thrilled with paying towards art collections (If they still have such at Canary Wharf), flowers, expensive meetings, even more expensive premises et al, but that’s not my call; I just pay what I am told to, or there goes my livelihood.

  9. The problem is how many people actually realise that the FCA is paid for by them and not by the Government (although ultimately they pay either way)?

    If it was in the public domain I am sure that their response would be interesting.

  10. Michael Antrobus 31st January 2014 at 3:52 pm

    Congratulations to Nic for shedding light on this matter. One would have thought that Amanda Davidson might have raised some small protest at this expenditure. OK, as an FSA Board member she is not meant to represent us but surely she ought to have been aware that money being spent in this way was bound to upset IFAs. It raises a doubt in my mind at how vigorous she is in the scrutiny of FCA remuneration

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