View more on these topics

Wheatley: £3.2m software write-off was a mistake

FCA logo new 620x430.jpg

A £3.2m write-off for software licences bought but not used by the FCA has been described as a “mistake” by outgoing chief executive Martin Wheatley.

Earlier this month the regulator’s annual report revealed it had entered into a one-year contract in May 2014 to purchase several software licences.

The FCA pre-paid in order to receive a discount, but said “utilisation” of the licences “had not materialised as anticipated”, resulting in £3.2m being written off.

Responding to a question from Money Marketing at the FCA’s annual public meeting today, Wheatley said: “We have made one or two mistakes and that write-off was one of them.

“We are pretty disciplined about how we run our budget and it is unusual for us to find ourselves in a position where we run over.”

The regulator made a £58.3m loss in the year to 31 March 2015, driven by losses in its defined benefit pension scheme and consumer credit costs.

Asked what assurances the FCA can give that it will keep within its budget in 2015/16, chairman John Griffith-Jones said “unexpected items” are par for the course.

He said: “Last year we had a deficit in the accounts overall but that was planned because we didn’t collect consumer credit fees until consumer credit regulation started operating.

“Do we aim to run to the budget? Yes we do. Do you in organisations of our size have one or two unexpected items of good and bad over the course of the year? Sadly, yes. But it is the responsibility of the organisation to keep the bad ones to an absolute minimum.”

Recommended

Aegon-Building-2012-480.jpg

Aegon launches unit-linked guarantee for platforms

Aegon has launched a unit-linked guarantee product for its Retirement Choices and One Retirement platforms. The firm already offers unit-linked guarantees – a blend of drawdown and guaranteed income – but says this is the first time a provider has made the products available through a platform. Aegon adds the new product, available from today, […]

Tony Wickenden: Has UK jumped the gun on diverted profits tax?

I ended last week’s article on corporate tax avoidance with the fact Caffé Nero has recently brought attention to itself (in a good way, it had hoped) in deciding to stop stocking milk from farms in areas that culled badgers. It seems, however, that badger-loving Caffé Nero is also a fan of Luxembourg and the […]

Artemis Monthly Distribution Fund: positioning and outlook

Managers James Foster and Jacob de Tusch-Lec outline the fund’s investment approach and discuss current investment themes and outlook for the bond and equity markets. As James and Jacob confirm, the Artemis Monthly Distribution Fund’s aim is to generate an income from both equities and bonds. They explain their investment approach in each asset class, the sectors where they are […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 27 comments at the moment, we would love to hear your opinion too.

  1. Words fail me. How did we get to a position where these incompetent buffoons are allowed to get with this time after time ?

  2. As usual very easy to spend someone Else’s money

  3. Lucky they do not have to meet capital adequacy rules

  4. It is not rocket science. If you think you will need that licenses, surely it would make sense to do all the due diligence needed to ensure you do actually need them. Then and ONLY then do you start negotiating your discount and upon satisfactory result, buy the licenses and start to use them straight away. The incompetence of these total idiots goes beyond belief sometimes it really does and then to pass it off as a “mistake” is disgusting. A totally unacceptable mistake that should be paid for by no bonuses being allocated until the value of the mistake has been repaid.

  5. Julian Stevens 22nd July 2015 at 2:30 pm

    “We are pretty disciplined about how we run our budget”. OFFS Martin, pull the other one, it’s got bells on. What about the £3m+ that you blew in the wake of the closed book review fiasco?

    John Griffith-Jones said “unexpected items” are par for the course. Yes, in an organisation that couldn’t run at a profit a wine tasting day in a vineyard, I suppose they are.

    • Steven Farrall 23rd July 2015 at 2:22 pm

      The problem is endemic to unaccountable and mis-incentivised bureaucracies everywhere and everywhen. Since there is no loss or profit motive in what they do, and demonstrably they have no fear of loss – witness the failure of the FSA and its staff still having jobs with the FCA – it will always and forever be unable to run an efficient budget. Essentially the FCA is a socialist central planning organisation and since any form of economy is impossible under socialism it will never ever deliver any value for money and will always overspend.

  6. PS How do the board justify paying bonuses to these morons? We keep being told that they are for doing the job well. If blowing £3.2 million is doing the job well I dread to think what doing it badly would have to be.
    Rant over (for now)

  7. He could have added,

    It’s not my money, so who cares.

  8. Hang on we’ve made one or two mistakes and cost you £3.4 million but we still paid our bonuses because we are worth it
    If anyone is to be given a bonus it should have been the salesman that sold the software in the first place .
    I hope that when the new CEO comes in bonuses will be paid if he can cut the current cost and overheads by 40%. In a similar fashion that other government departments have recently been informed that is their mandate.

  9. Philip Cresswell 22nd July 2015 at 2:52 pm

    My understanding is that the FCA operate as a limited company, hence the posting of their accounts.

    I don’t feel that the Director’s have been discharging their responsibilities properly, or as you would expect, in the running of this company. They should be held to account properly by the appropriate government select committee on behalf of its creditor’s (us), and some sanctions be applied to those responsible.
    They are trading at a massive loss, but at the same time the Director’s see fit to award large salary increases and bonus payments and yet preside over a “black hole” in their final salary pension scheme and “write off” huge amounts of money in other areas at the same time.

    The Director’s of most PLC’s cut their cloth to suit the company circumstances, and in many cases DB pension schemes, for just one example, are considered to be unaffordable by the firm and are closed.

    It’s almost as Mr Griffith Jones and Mr Wheatley don’t seem to think this money is/was “real money”

  10. Julian Stevens 22nd July 2015 at 2:54 pm

    That’s a large part of the problem Marty ~ with the exception of the closed book review debacle, they don’t have to justify anything to anyone but themselves, hence I’m forever banging on about the need for Statutory Oversight, preferably from the TSC, which shares my view and is currently seeking the necessary powers from Parliament.

    I really hope it gets them, as both Mark Garnier and Andrew Tyrie would seriously like to get stuck into the FCA and not be fobbed off by the likes of MW. Though it’s a pipedream, it would be lovely if Tyrie had the power to impose on-the-spot fines on FCA individuals, as did Judge Lance Ito at the trial of O. J. Simpson all those years ago. Get your wallet out Mr Wheatley and don’t argue, otherwise you’ll be held in contempt. The Committee takes plastic. Wouldn’t that be great?

  11. Pulled from the FCA website!
    How we are funded
    We are funded entirely by the firms that we regulate, through charging them fees to carry out their financial activities. How much they pay is determined by what type of business they are and what activities they carry out.
    We are accountable to the Treasury – which is responsible for the UK’s financial system – and Parliament. However, we’re an independent body and we do not receive any funding from the Government.
    So when MW says “We have made one or two mistakes”, those mistakes will have to be paid for from future levies. Says so on their website! Absolutely disgraceful.
    High time they started practicing what they preach and pay for their own “mistakes”. Perhaps a recovery of previous year’s bonuses would go some way towards paying for those “one or two mistakes”. Under their own rules, they should be able to claw back bonuses over the last 10 years. What’s good for the goose……

  12. Christian Patricot 22nd July 2015 at 2:57 pm

    Why do they still have a DB scheme?

  13. “have one or two unexpected items of good and bad over the course of the year? Sadly, yes”.

    Yes we do there called interim levies and a 135% increase in our fees thank you.

  14. Dick Sprinkler 22nd July 2015 at 3:22 pm

    After commenting on this unaccountable nonsense since self regulation morphed into statutory regulation and became part of the landscape. I can state categorically that nothing ever changes.

    We were talking about the pension scheme in PIA days,
    Bonuses since Adam was a lad,
    incompetence par for the course,
    regulatory costs again those will remember the big PIA hike.
    And of course there are many many others !

    As a result I like you all am becoming bored with the sound of my own voice. Its groundhog day, the emperors new clothes and all the other apt descriptions used by me and many others over the years and here we are talking about the same old same old 20 odd years later !!

    Guess what ? it aint gonna change unless and until the Government step out of the way and the so called regulator is answerable for what it does and does what the market ACTUALLY needs not a regulatory job creation program designing disaster programs.

    I suggest that none of us hold our breath – this all suits them very very well

  15. Whao Whao Whao and whao !!!

    Hold on, one cotton pickin minute (I know Martin likes to use the old cowboy / western metaphor)

    “One or two mistakes” ? “we are pretty disciplined with our budget” ?

    As John Wayne always used to say, don’t pee down my back and tell me its raining !!

    Fact; you lost £58.3 million of my/our clients pounds this year !! how many millions is your pension fund in deficit ? you wasted £3.2 million on IT, you messed up on the closed book review, , how much did that cost the companies involved ?, £118 million over charged or fee block ? and I shudder to think how much is wasted in your offices, art, swish meetings away from the office, the list can go on and on !

    Fact you and yours are a disgrace none of you have anything to be proud of…… period !

    And as for John Griffith-Jones (while, head of KPMG) ! two words, HBOS, CO-OP !

    If it wasn’t so serious it would be laughable !!

  16. 30 years ago, we were expecting, and dreading, the likely introduction of Government supervision, with licencing, examination and supervision of all sales and advice activities.

    In the event, self regulation was seen as a positive result, with a (relatively) low cost structure we had to meet, seen as a small price to pay.

    Since then, it has suited successive Governments, and will continue to do so, to have a largely unaccountable, pretty much out of control but ‘independent’ body to take responsibility away from Government, and most importantly, at no cost to Government budgets.

    Tyrie and Garnier can and will continue to agitate, and good for them, but sure as hell the Treasury are not about to accept any direct responsibility for regulating the Financial sector and the Banks, and certainly not the advice sector.

    Remember, those who can, do, those who can’t, teach, and those who are so bloody useless they get in the way and cock everything up, are sent to another room to carry out a ‘review’ and re-write the rule book for everyone else. It’s just that now, they also have the ability to reward themselves disproportionately for doing so.

  17. I think Bill Turnbull’s mistake summed them up nicely.

  18. Charles Pedrick 22nd July 2015 at 5:02 pm

    I’m sure I too would be ‘disappointed’ that I haven’t had my contract renewed, especially if I have been allowed to get bonuses and be paid a vast amount when I have made so many mistakes.

    Why doesn’t the select committee demand that this baffoon Wheatley, has to come before the them and account for his disastrous ‘leadership’ and itemise what this has cost us all.

    He should then have to repay the FCA, along with all the other overpaid and unaccountable bureaucrats that live so well on our money. I wonder if there is a golden handshake involved, we need to be told, we have a right to be told, a good pension perhaps as well ?

    Surely, his contract must have made him responsible for his actions with some clause about being accountable, if is doesn’t then we need a full investigation, to find out who drafted the consultancy contract or [C of E] and they too should be held responsible, for their utter incompetence ! God I hate incompetence, how do these people get away with it – because we let them …..

  19. Trevor Harrington 22nd July 2015 at 5:06 pm

    Right then you lot, all of you commenting above, do something constructive about your very valid and eloquently put points ?

    JOIN LIBERTATEM ….. IMMEDIATELY …. AND GIVE GARRY HEATH YOUR MANDATE ……
    AND ALSO …. YOU CAN GET OTHERS TO JOIN AS WELL …

    OR

    SHUT THE F—K UP ….
    (apology to those who are already members – x)

  20. Ah well, could always have popped along to Barclays and fined them a few million to make up the deficit; if only the greedy Government hadn’t decided to trouser the loot.

  21. I guess the FCA is not a great deal different from any other non-private quango.

    But the big difference here is that they are charged with operating a value for money organisation that authorises and checks up on financial advisers and they cannot even balance their own books or account for their profligate spending.

    The shabby nature of their dealings with the longstop, RDR, and many many other issues indicates that they are no good to man nor beats but, like most quangos, really good to themselves.

    Kick the whole bloody lot out and start again.

    Let’s have a regulatory RDR!

    • Julian Stevens 22nd July 2015 at 7:13 pm

      Scrapping and replacing the FSA was presented as if it would constitute kicking out the existing lot and starting over but all that really happened was a hugely costly rebadging exercise (how close to Sants’ estimate of £50m did it actually turn out to be, I wonder) with a few new faces at the top.

      But at least Osborne seems finally to have realised that, in the FCA, the government has a real problem on its hands and that more than a cosmetic makeover is going to be required to make any real difference. Maybe, now, he really will grant the TSC the powers for which it’s now clamouring and if Wheatley’s successor sticks up two fingers to the TSC he can be held in contempt and fined personally for such arrogance and insolence.

  22. Trevor Harrington 22nd July 2015 at 8:01 pm

    Just send Garry Heath (Libertatem) your money …. it’s only £240 squids … for heavens sake …. just do it !!!!

  23. Julian Stevens 24th July 2015 at 4:27 am

    Imaginary private interview with Martin Wheatley:-

    Q. D’you not consider that you owe the industry a formal apology for having thrown down the drain £3.2m of its money (in addition to the very similar sum spent on the Chance report in the wake of the FCA’s botched announcement of its proposed closed book review?

    A. Na, not really. As JG-J has said, in an organisation such as the FCA, sh*t happens from time to time. You just have to shrug your shoulders and carry on.

    Q. D’you not feel personally responsible for the fact that this happened on your watch?

    A. Na, not really. See my answer above.

    Q. Was any Cost:Benefits Analysis undertaken before committing such a sum to a project that has ultimately turned out to have been a complete waste of OPM?

    A. Na, we don’t consider such exercises necessary for projects such as this.

    Q. Was any consultation with any outside parties undertaken before the FCA decided to spend and, as it’s turned out, ultimately waste this amount of money?

    A. See my answer above.

    Q. How extensive was the competitive tendering process for the job?

    A. No comment.

    Q. Have any individuals within the FCA been held to account for having wasted such a large sum of OPM?

    A. Na. It was what we like to call a “collective failure”.

    Q. Having been ultimately responsible for the waste of not just £3.2m on this project but a similar sum on the Chance report, how can you justify taking a bonus of £92,000 this year?

    A. Oh, that’s not my call. The board decides such matters.

    Q. But do you think that, under the circumstances, it’s right for you to accept such a bonus?

    A. No comment.

    Q. D’you think this debacle has adversely affected your reputation and/or your future job career prospects?

    A. A bit perhaps, but not significantly. In the City, what count are your standing and who you know. The offers for non-exec directorships have already started coming in.

    Thanks, Mr Wheatley. Nice talking to you.

Leave a comment