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Bonus Anyone? August 10, 2014

Posted by Audit Monkey in The Joy & Pain of Internal Audit, The State of the British Nation.
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As my active readers will be aware, in some parts of the financial services industry, your employer will pay a bonus based on the firm’s profit and your own personal contribution to the firm’s success. In some parts of the financial services industry, these bonuses can be very generous, especially in investment banking. The harder part to justify is where a bank has made negligible profits or even losses, yet the Board of Directors and staff are still paid bonuses. I’m not entirely comfortable with this but ultimately, the Board is accountable to the shareholders, so we let this ride.

However, imagine my surprise on when I read that the Head of the Financial Conduct Authority (FCA), Martin Wheatley, and the nine Executive Committee members are not going to receive their bonuses pending an investigation into the life assurance leak episode which sent share prices in major insurance firms down. Apparently Mr.Wheatley has forgone a bonus of £57,000. This compares with a bonus £86,000 for the prior year.

Hello?!! Why an earth is Mr.Wheatley being paid a bonus in the first instant? He and his organisation are supposed to bringing independent oversight to the financial services industry and protect consumers. Where did the payment of bonuses come into it for a body which is supposed to be neutral? All this begs more questions. On what basis are the bonus payments made? Who judges whether bonuses are appropriate? What KPI’s are used? Hopefully it’s not ‘we fined ‘x’ number of firms this year, more than we did last year’, hence we deserve a bonus. If this measure was used, it would be seriously skewed.

I know I have probably wittered on but I do find it staggering that public sector officials are paid a bonus for doing their jobs. The only saving grace is it’s not tax payers money that are directly paying the FCA’s salaries and bonuses but a levy charging to firms in the financial services industry. Then again, we are paying indirectly. Sweet.

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Comments»

1. ITauditSecurity - August 11, 2014

AM,
Agreed. On our side of the pond, most government jobs have benefits beyond what the average taxpayer has. They are already overpaid and underworked.

2. allanmisner - August 28, 2014

I’ll admit, I don’t know all of the details around these bonus payments, but I do feel I should comment on the topic. Talent is often hard to get and hard to hold. Do you penalize someone for something that was outside their control? Even at the risk of losing them to a better opportunity? Again, I don’t know what the particular “behind the scenes” are for this entity, but it is worth noting that most things are not as black and white as they seem.


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