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Nic Cicutti: Wheatley’s wages are not the real scandal


Over the years I have followed regulatory affairs, both as a Money Marketing columnist and for certain newspapers. One of the striking things about many discussions has been their utter predictability, usually on the IFA side.

Take a given subject and you can almost guarantee what the response will be. Some advisers, and others in the industry, are seemingly incapable of responding to changed circumstances. They reach for tried-and-tested default mechanisms when reacting to situations, regardless of whether these automatic responses make any sense in today’s world.

The response to my comments last week about the FCA’s latest retail investment advice consultation document is a good example. As predicted, advisers queued up publicly to tell me why I was wrong. In private, however, most emails were supportive.

Then there is the perennial issue of pay at the FCA. Earlier this month, the regulator published its annual report which showed the total pay packet of chief executive Martin Wheatley was £610,000. Wheatley’s basic salary increased in 2013/14 from £430,000 to £460,000.

True to form, up pops Highclere Financial Services’ Alan Lakey, now an Apfa council member, to describe this salary as “shocking”.  Or at least it will be if Wheatley is handed a further £70,000 bonus, deferred until the outcome of an external review into its bodged “closed book” briefing in March. Shocking? Really? Don’t get me wrong – I am not a fan of bloated salaries by any means.

But we live in a world where, for example, the total remuneration package for the chief executive at fashion house Burberry comprises a £1.1m salary, an annual cash bonus of £2.2m, pension contributions of £330,000, share awards worth £4.4m plus an unspecified “cash allowance” of £440,000.

Or take Hargreaves Lansdown, where chief executive Ian Gorham picks up £1.5m a year, according to reports. In November last year, Gorham was reported as having sold £8.4m-worth of shares he owned in the company, which he joined only in 2009.

Set against that, Wheatley is the boss of an organisation with about 3,000 employees and a budget of almost £450m. It is fair to say the regulatory oversight of the UK’s financial markets and responsibility for ensuring their stability are vital to the economic success of this country. Millions of jobs in the UK and worldwide depend on Wheatley and the FCA getting it right. Is Alan really saying this kind of salary is unjustified in that context?

And what of Neil Liversidge, who claims Wheatley “and his minions seem to think we are overpaid when in reality I probably work twice or three times Wheatley’s hours for
a tenth as much as he earns”?

I do not believe Neil has concrete proof of what Wheatley and his minions really think or that he has accurate information about the FCA boss’s working week. So these comments are at best a rather weak figure of speech; at worst they indicate a rather pointless attempt to play to the gallery.

In fact, the real scandal is not Wheatley’s annual wedge or the bonus he may pick up in the next couple of months. It is the appalling attempt to justify the vast sums paid by the FCA for its luxury away-days.

FCA chairman John Griffith-Jones is quoted in Money Marketing as saying that booking luxury hotel The Grove was good value because when they go there in November “there are not many people using it and we get a significant discount”. 

In other words, paying £15,000 for an overnight stay in a five-star hotel is good value because you won’t get snotty-nosed kids dive-bombing you as you do your morning lengths in a “striking black mosaic-tiled, ozone-filtered, indoor swimming pool” where “the water feels silky as though you’re taking a secret midnight swim”.

Griffith-Jones is defending the indefensible. He knows, as we all do, there is no justification for spending thousands of pounds on luxury accommodation for an away-day.

Far more important than the issue of money wasted is the refusal to admit anything is wrong with the practice. The weakness of his excuse is in fact a form of contempt for the general public, myself included, who indirectly pay his wages through charges on the products we buy.

If Griffith-Jones does not understand that, the FCA board – including former Which? firebrand Mick McAteer, long-standing IFA Amanda Davidson and former Citizens Advice chief executive David Harker – should be telling him so. 

The issue, it seems to me, is that of precisely what we hold the FCA “and its minions” – to borrow Neil Liversidge’s description – accountable for and what we do not.

The amount of money they get is, frankly, not an issue for me. What really matters is the interface between the FCA and advisers and responding to what the regulator does in a measured way.

This also means using the platforms you have intelligently. For example, Neil and Alan are much-respected outliers for Apfa. They can say and do things their trade body would never be able to say publicly in a million years. 

They should be co-ordinating the contributions they make, ensuring they hit the nail hard on the head every time. That means avoiding predictable scattergun responses in favour of carefully chosen targets. Do they have what it takes?

Nic Cicutti can be contacted at 



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There are 15 comments at the moment, we would love to hear your opinion too.

  1. I agree with you Nic entirely on this one. However the FCA is despised by many people and guess it is inevitable that advisers will criticise Mr Wheatley’s pay out of emotion rather than logic.
    I was toying with the word despised but you need to understand IFA frustrations here. Look at the absurd and irrational FSCS levy paid this week by many firms (for firms also read individuals) , the inability of the FCA to accept that advice and product are not one and the same thing and that in spite of EU rules to the contrary they should do their own thing and recognise advice. Then there is the presumptive CP on MAS where the options for how much advisers should pay does not include nothing. Also the delay and procrastination on the issue of the long stop. But even on a more mundane level, every written communication with the FCA is threatening and unfriendly. You must and if not the consequences will be etc. Another example this week. I was brought up on please and thank you and it got me a long way. We are not all bad, we wish to support the FCA but frankly in every dealing with them you feel as though you are wasting your time.
    Is it really any wonder that Mr Wheatley as head man gets such (unwarranted) criticism?

  2. Nic, ref Wheatley’s salary I disagree – The other examples you cite are business, not “Public servants”. The business create wealth across the economy and is there to make a profit. The FCA is public body and as such should not be paying salaries and “package” commensurate to industrial equivalents. These people think that they are worth what they are paid and that one has to pay big money to get the right “talent” in place. I am sorry but you could easily get similar talent to those we have tin place for a fraction of the remuneration package. With so many screw ups over the years if the people at the top of the FCA/FSA are (or were) the right talent then I am afraid the whole thing is FUBAR.
    Ref your comment about the away day is spot on.

  3. Derek Bradley ceo Panacea Adviser 24th July 2014 at 9:28 am

    Such headlines are really the result of an acute sense of frustration in what many in the adviser community see as the lamentable representation they have had in the face of an ugly and unfair series of battles with regulation over the last few years.

    When I started Panacea, some supporting firms thought that we were a “trade union” for IFAs. Nothing could be further from the truth, we are, as most will now know, an active online community (some 18,000 in fact to date) for smaller IFAs who are looking for access to help, educational support, advice, ideas and technical training all in one place and for free!

    We achieve a lot with a low level of resource because we recognise that if someone else does something well, work with them and do not try and re-invent the wheel.

    So, despite the many criticisms of AIFA’s and APFA’s past failures, it may be better to look at a ‘Mary Portas’makeover rather than to ‘bin it’ and start again.

    The problem APFA has in the eyes of many disaffected IFAs is that it has not appeared to engage with its membership over a number of very important years on issues of vital importance to the membership, the industry and ultimately the consumer.

    The past leadership has ploughed an often poorly consulted furrough with little or no understanding of what the root and branch membership either wants or stands for. That is changing I believe but I would suspect not quickly enough for many.

    To set up a new trade body is not an easy task, I did not see that setting up another body solely for “Independent” financial advisers had any merit to gain sufficient funding support beyond an initial wave of euphoria to achieve any long term credibility, and I was right.

    The adviser community needs to look at what it wants a trade body to do.

    Is it to act as a centralisation of views and opinion in order to see fair play by way of concensus in the formation of a regulatory framework and the impact it has on its membership, or is it to see the protection of the word “Independent?

    As restricted and independent advisers are all subject to the same regulatory constraints and controls, and to a great degree share the same ideals (that of ensuring their clients get the best possible service and advice relevant to their aims, aspirations and circumstances) surely strength can found in the broad church model rather than creating a sect like representation that will never get heard with any degree of seriousness.

    So that brings us to the thorny question of trade body or trade union. The latter in society today does not carry the clout of pre-Thatcher years but unions still have the capacity to bring normal life to a standstill.
    Professions do not make easy bedfellows with this ideal and I suspect IFAs would feel uneasy at being represented by a trade union and unwilling to get involved with mass protest.

    Despite many IFAs feeling rightly aggrieved with the seemingly undefended imposition of regulatory change and lack of long stop I cannot see that a cry of “Everybody out” will garner too much support from the industry or the public.

    The sight of IFAs huddled around braziers in high streets up and down the land would not do the credibility image too much good.

    So, where should we go in search for the Grail of strong and united representation?

    A starting point is as Nic alludes to, is in the ‘cojones’ growth department.

  4. Dick Sprinkler 24th July 2014 at 9:36 am

    ‘Millions of jobs in the UK and worldwide depend on Wheatley and the FCA getting it right’

    says it all really !!!

    By the way, Who pays his salary Nic ?

  5. Nic, the FCA along with all the other Quangos are in place to provide a public service, no matter what their legal structure.

    They are not world renowned brands, exporting goods far and wide generating taxable profits that employ either directly or indirectly many thousands of more people. They do not generate income through the manufacture or marketing of goods or services. They do not have a brand that is seen as aspirational to the global market. The issue is that they generate all of their income through the efforts of other people. No one is expecting him to be paid peanuts as we don’t want monkeys.

    However, it is the whole ethos of how this works that sticks in many peoples craw. There appears to be no oversight, no one appears to asks questions or rebukes where necessary. The FSA/FCA lurches from one disaster to another, regulation just keeps on increasing and fees just keep rising. Golden hello’s, Golden goodbyes, pension contributions, expenses, bonuses, expensive offices, plants, office re-furbs, away days and first class flights to Toronto, Hong Kong and all points North. Then there’s the outside consultants, review after review, Big 4 Accountants, Ex public schoolboys and so on. When does it all stop?

    In the ideal world i’d like to have an IFA firm that could charge all my clients whatever I want, no need to justify any of my fees. No matter how they complained it was the law that they had to pay me. All my office expenses would be covered, no risk of any trading issues there. I could then invent a bonus scheme of my own design which they would also be paying for. and gold plated pensions galore for all my staff.

    The point is Nic, they want to pretend to work just like a real company but don’t have to face up to any of the realities of the real world. As Sam says above, they then don’t even have any humility, they use a condescending, threatening, “because we can” approach. They never make mistakes and so they never have to say sorry. Do as we say not as we do!

    All we want is equality and fairness, but as it was written in Animal Farm “some animals are more equal than others.”

  6. I agree that the salary for the role is reasonable – He’s in charge of regulating the entire UK financial services industry, thats over 1 million people across a huge range of businesses and activities. I’m sure he could walk into a senior role with a private organisation tomorrow and earn at least double that.

    Regarding his hours, there was an article published recently that outlined his monthly diary appointments, and it was clear this is a 24/7 job – true there were alot of dinners and travel, but these are a means of delievring speeches and messages to the industry – a key aspect of his role.

    I would also agree the critisism should be on how the budget – not salraies – are spent; and the away day spend appears unreasonable – however we are only speculating based on media articles, and dont know the full ins and outs.

  7. “I’m sure he could walk into a senior role with a private organisation tomorrow and earn at least double that”.

    Like Sants you mean Matthew – LOL !

  8. “Millions of jobs in the UK and worldwide depend on Wheatley and the FCA getting it right. ”

    Absolute nonsense. I would expect this sort of thing from Wheatley, who has to justify his existence to himself to get out of bed in the morning, but not from a supposedly free-thinking journalist. Certainly it can be argued that the existence of modern financial regulation makes the markets more stable, or avoids the hardship that resulted from bank collapses in the 19th century and before, or protects the general public from scams to a certain extent. But the idea that people wouldn’t be able to produce anything if the FCA didn’t exist is delusion. Life would still go on.

    Matthew: what on earth makes you think he could walk into a private sector job tomorrow? If he could earn double what he earns now, why doesn’t he? He’s not had a job in the productive economy for ten years, since he left the London Stock Exchange following the fallout from the failed merger with Deutsche Börse.

  9. Do you honestly believe that the big consultants and banks wouldn’t want to roll out the ex-chief exec of the regulator on thier boards?! And pay him a £mil a year to do so?

    Exactly like Sants – His teneure was irrelevant, that fact was that Barclays thought they had hit the jackpot getting him to head up UK compliance – He was UK compliance!

  10. Dick Sprinkler 24th July 2014 at 1:19 pm

    @ Matthew

    And why prey tell do you think he (Sants) was asked to leave within a few months ?

    And please don’t tell me that you are naïve enough to believe the stress story !!

    @ Sascha – just about spot on !

  11. And right there Matthew is where it is all wrong !!!

    They (like Sants,cole smith) should not be allowed to cross over without a long waiting period !!

    If they are going to pay dross like this, then they should earn their money; not free load off my clients money they pay in fees, and then use/abuse the position they have, as a stepping stone to a bigger pay off with a organisation within financial or auditors organisations !!!

  12. To some extent I agree with your point of view Nic, that people in positions like this have to be remunerated at a reasonable level otherwise we do not necessarily get the calibre of individual, particularly if that individual can go off into the private sector.

    I think the real issue here is accountability and the fact is that the FCA’s own governance does not have the necessary level of accountability and the Treasurer Select Committee that it reports to does not have the necessary teeth to act as the counterbalance that it should in the US style of congress reporting.

    The only other thing that I would comment on is that I personally believe that the private sector pay in the companies that you have mentioned are also not within good company governance, after all I wonder how much say the real shareholders of these companies have over the remuneration packages?

    Top government employee pay should not be linked to private sector as we should not forget that a majority of public sectors workers have a Final Salary Pension Scheme that most in the private sector do not enjoy.

  13. Ditto Peter.

    Burberry and Hargreaves are private companies. Mr Wheatley earns more than Mr Cameron. and we pay that salary.

  14. Matthew: The argument “I could have earned more in the private sector” implies that he has skills and experience that would make him valuable in the real world. Not that he could open doors and curry influence in the corridors of power! For two reasons: 1) that’s corruption 2) he can only do that AFTER he’s taken the bureaucrat’s job.

    Considering the number of times we hear the “we have to pay top dollar or we’ll lose all our best people to the private sector” argument, it’s surprising that so few bureaucrats actually do leave Quangopia for the supposed riches on offer. Except, of course, for the likes of Sants who are leveraging their influence and patronage, not their talent and ability.

  15. Question 1 Is there any perceived difference now between the FSA and the FCA for advisers or consumers?
    Q2 Do any advisers still have any respect for the FCA?
    Q3 What will they call themselves next and how soon?

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