Financial News

  • 27 June 2014, 11:41

FCA Bosses Defer Bonuses Amid Insurance Probe

The chief executive of the City watchdog is to defer his annual bonus amid an ongoing probe into a briefing it organised which wiped billions of pounds from the value of UK insurers.

Sky News can reveal that Martin Wheatley and eight colleagues on the executive committee of the Financial Conduct Authority (FCA) have decided not to accept any discretionary payments for last year until the inquiry is completed.

Their decision is expected to be disclosed in the FCA's annual report, which is to be published on July 9.

Mr Wheatley, who has earned a reputation as a hardline regulator by overseeing fines for dozens of firms since taking over, is said to have encouraged senior colleagues to agree to defer any bonus awards.

Last year, he was awarded a performance-related payout of £86,000, although this would have been higher if he had been in place for the full 12 months.

It is unclear whether the size of the bonuses he and his colleagues are deferring will be outlined in the FCA's annual report, although in aggregate they are likely to total hundreds of thousands of pounds.

The FCA sparked fury in the City and at the Treasury in March when it arranged a newspaper briefing about an inquiry into roughly 30 million policies held in so-called 'zombie' insurance funds.

A day-long investor panic was triggered, with billions of pounds being wiped off the value of major insurance companies such as Aviva, Friends Life and Legal & General.

Some companies issued statements on the day complaining that a false market had been allowed to develop in their stock.

The FCA took more than six hours to issue a clarifying statement about the terms of its review, after which many of the companies saw their shares rebound.

After the stock market closed, the regulator issued a further statement in the wake of an emergency board meeting which is said to have been demanded by furious Treasury officials.

Many of the nine members of the FCA's executive committee had no involvement at all in the media briefing, and they are understood to be likely to receive their bonus awards once the inquiry is completed.

Sky News revealed earlier this week that Mr Wheatley and senior colleagues were being represented during the investigation by Kingsley Napley, the law firm which acted for the rogue trader Nick Leeson.

The other members of the FCA executive committee are Clive Adamson, director of supervision; David Lawton, director of markets; Sean Martin, general counsel; Tracey McDermott, director of enforcement and financial crime; Zitah McMillan, director of communications; Victoria Raffe, director of authorisations; Lesley Titcomb, chief operating officer; and Chris Woolard, director of policy, risk and research.

Reports have suggested that Mr Wheatley's position could be threatened by the fiasco, although insiders believe this is unlikely after George Osborne, the Chancellor, praised his efforts to clean up financial markets in his Mansion House speech this month.

In total, the FCA has set aside £1.7m for the cost of the inquiry into its mishandled media briefing, although it has spent only a small fraction of that sum so far.

The FCA declined to comment.

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