Staff at the UK’s financial regulator could be forced to rely on a hardship fund to make up for their “objectively low pay”, according to a union.
Unite said a failure to address the salary shortfall at the Financial Conduct Authority (FCA) risked embarrassing the watchdog, whose workers supervise some of the country’s largest banks and wealth managers.
In a letter sent last week to FCA chief executive, Nikhil Rathi, the union said its members had rejected the regulator’s 2024 pay offer, arguing that it did not offset the surge in UK inflation, which was as high as 10% last year and resulted in real-terms pay cuts for many of its 5,100 staff.
Unite said the FCA’s employees were now living on “objectively low pay” that fell below the minimum income standards set by the Joseph Rowntree Foundation. Those standards say that people needed to earn £29,500 to reach an acceptable standard of living in the UK last year.
That benchmark is likely to increase further in 2024, prompting the union to suggest that emergency measures would be needed.
“Failing to address this means that we, as a branch, will have to look at establishing our own hardship fund for members in 2024 as the demand is there,” Unite told Rathi. “This is highly unnecessary and embarrassing in a regulator publicly championing the role its staff have played in addressing the cost of living crisis for consumer.”
The FCA said about 60 of its staff were earning salaries below the Joseph Rowntree Foundation minimum level, the majority of which were apprentices.
The prospect of employees having to rely on financial support from the union will raise further concerns over the FCA’s ability to retain high-quality staff, who are responsible for supervising and supporting the oversight of some of the UK’s most complex banks and financial companies.
The regulator has struggled to deal with a perception that it has a “revolving door”, in which talented staff leave for higher paid jobs in the City where they can leverage their knowledge about the inner workings of the watchdog.
Unite said one of its main concerns was the FCA’s decision to abolish base-pay increases for staff linked to the UK’s rate of inflation.
Instead, any increases will be based on performance, with the FCA’s strongest performers in its most senior ranks eligible for increases of up to 3.5%. For its most junior and lowest paid employees, that figure rises to 6.5%. Employees whom the FCA deems to be in need of improvement will receive a 1.5% rise, far below the current inflation rate of 4%.
The FCA said: “We offer one of the best employment packages amongst the UK’s regulators and public authorities. We have successfully recruited around 2,000 colleagues over the past two years, including significant numbers in Edinburgh and Leeds. Our voluntary turnover rate at the end of this financial year is expected to be around 7.5%.”
The union also claimed there had been a “toxic environment” for staff representatives who had volunteered their time to discuss and negotiate the pay deal with the FCA, having been given minimal information and short notice to discuss the deal with bosses.
The FCA denied the allegations. “We do not recognise the characterisation of the environment for staff representatives and have recently enhanced our staff consultative committee to include representatives from Unite and FDA,” it said, referring to the FCA’s other staff union.
“The overwhelming majority of staff at the FCA are not members of Unite. We will respond to all feedback received through our robust staff engagement mechanisms.”
