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 email@example.com