Some reading is demotivational 

If you have the stomach for it, the FCA Annual Report & Accounts for the year ended 31st March 2018 makes for...interesting reading.

It does take a particular kind of person to read a document of this nature.  It runs to 149 pages in total.  Before you even get to the financial data, there's potentially 107 pages of various other kinds of content to navigate.  A very great deal of it feels like a kind of window-dressing, rather than the kind of substantive content which most of us would wish to engage with.  One has a sense of the words on the page actually being a kind of barrier to understanding.

Of course, the component which really draws the attention is the quite separate 'Remuneration Report'.  The figures are really rather quite shocking, but this does tend to highlight the core truth that regulation is really all about a certain kind of employment.  Indeed, they are so shocking, that it helps to get the headline data out of the way first of all, so that one can focus on the more general picture.

One Executive Director (let's keep this anonymous, if at all possible) saw his total remuneration jump from 2017 to 2018 by +31%... to £589,000.  This is a kind of figure which is almost impossible to get one's head around.  I am sure that those in favour of institutions such as the FCA will justify this by mumbling the usual mantra of "having to pay these salaries to get the best quality people", but it is simply difficult to imagine how any person could come with that price-tag attached, unless they were (say) someone like Elon Musk, an entrepreneur, risking their own capital to create something innovative, new and game-changing.  There is little innovative or new here.  This is simply a continuation of a kind of alternative reality project.

That jaw-dropping headline figure actually functions as a distraction from the main message from this section in the Report.  A page later, we're informed that the median remuneration within the FCA (Parent Company) is £65,737 in 2018.  A footnote to the page helpfully tells us that " employees received remuneration in excess of the highest paid director" which is profoundly reassuring.  In 2018, the lowest level of remuneration within the range was £20,356.

Of course, median figures are one thing, but averages are another.  The Report does not give us an average, but because the recent 'Investment Platforms Market Study' (MS17/1.2) does play with averages in relation to platform charges, it seems only fair to try the same thing here.  We are told later in the report that the total wage-bill for the FCA Group is £334.3m, and that this covers a total of 3,561 staff.  Simple arithmetic gives us our average:  the staff costs per person work out at an average figure of £93,878.  I appreciate that averages can be misleading, but what's sauce for the goose is sauce for the gander.

All of that is paid for out of fees and levies, but more to the point, I wonder what your average staff cost might be?  Factor in your directors and best producing advisers:  is it anywhere near that figure?  Of course not.  It is faintly disconcerting to experience the sensation of having woken up within an episode of Orwell's Animal Farm, but that's regulation for you.


In 1998, the (then) Regulator established a Defined Benefit pension plan for its employees, at a time when the writing was already on the wall, and many such schemes were running deficits, and exploring closure.  For most informed commentators, that decision was a mystery even at that time.  Although the scheme was closed to future benefit accrual from 21/03/2010, a Recovery Plan was put in place from 31/03/2016, requiring an annual deficit contribution of £30m.  Although the Report is not explicit about the matter, it does look as if this overhead is included within the total staff costs of £334.3m (detailing employer's DB costs of £24.3m + net interest on DB scheme of £3.9m + payments made against unfunded pension liability of £0.1m).

Kevin Moss, 24/07/2018