UK financial watchdog staff edge closer to strike over pay cuts

Unite union says cost-cutting would turn Financial Conduct Authority into ‘bargain-basement’ regulator

Staff at the UK’s financial watchdog are edging closer to a strike over pay cuts that unions say will turn the Financial Conduct Authority into a “bargain-basement” regulator.

Members of Unite will vote in a ballot over whether to take industrial action against the FCA, after management allegedly refused to negotiate with the workforce on a “programme of severe cost-cutting”.

Workers are said to be unhappy about a transformation plan ushered in by the FCA’s new chief executive, Nikhil Rathi, that involves abolishing bonuses widely considered to be part of basic pay, as well as “unfair” changes to the staff appraisal system, plans to cut staff pension rights and lower pay for non-London staff.

Unite – which is not formally recognised by the FCA as its staff union – said the plans had already resulted in a plunge in morale and an exodus of experienced staff that could exacerbate problems at the FCA.

“Management at the FCA are attempting to implement a programme of pay cuts, which has come after two years in which the staff at the FCA have worked gruelling hours to provide financial protection against Covid for borrowers, investors, small businesses and people with mortgages,” the Unite national officer Dominic Hook said.

“Unite has made it clear that if introduced, these cuts will make it even less likely that the FCA will be able to deliver this high standard of public service in the future.”

The watchdog was already under fire for a number of scandals even before Brexit, which has given more powers and responsibilities to UK regulators.

A damning report in 2020 slammed the FCA for failing to properly supervise the mini-bond provider London Capital & Finance before its collapse, which wiped out the savings of 11,600 investors.

The FCA was also found to have failed in its regulation of the Connaught Income Fund in 2012, and has faced criticism for failing to intervene before Neil Woodford’s £3.1bn Woodford Equity Income Fund collapsed in 2019.

“You cannot regulate the British financial system on a bargain-basement basis as the chief executive, Nikhil Rathi, clearly wishes to do,” Hook said. “Management must enter into immediate negotiations with Unite the Union in order to avoid further damage and risk to the FCA.”

Current pay plans will result in the scrapping of bonuses, which Unite says are widely considered part of basic pay, and will result in about 10-12% pay cuts for the majority of its 4,200 staff.

However, new pay bands, which include different pay ranges for those based outside London, mean that 800 support and “associate grade” staff, the lowest two tiers, will receive a £3,800 pay rise.

The FCA has also offered to increase base salaries by at least 5% for staff below management level who meet performance criteria from April 2022, upping a previous offer for a 2% pay rise.

An FCA spokesperson said: “Our pay and reward proposals would ensure the FCA continues to provide one of the best employment packages of any regulator or enforcement agency in the UK.

“Our proposals focus on those paid the least, with 800 colleagues below manager-level in line for salary increases of, on average, £3,800.

“We are now carefully considering the feedback received during our extensive consultation with colleagues, with the aim of announcing the outcome by March.”