First, credit where it’s due. Mr Rathi inherited a regulator that had been kicked so many times by MPs and others for its regulatory failings that there were bruises on its bruises.

Mr Rathi has rightly, and logically, set about putting that right. He’s looked at where the regulator failed over its supervision, or lack thereof, of companies such as London Capital & Finance, the firm which collapsed leaving shattered investors wondering what happened to their £237m in savings.

He sensibly concluded that things would only improve with major reform at the FCA which is now under way.

One area he has turned his attention to his staffing. There have been many changes over the past 12 months, particular at senior level where there are lots of new faces and some structural changes too to focus attention on areas of most risk.

One concern raised by many outsiders was the existing FCA bonus scheme which, in the view of some, rewarded failure. It does, in hindsight, seem extraordinary to reward staff whose failings resulted in an additional £120m bill for the taxpayer. Mr Rathi has stepped in to scrap the bonus scheme.

That’s all well and good but FCA staff have mouths to feed like everyone else. They have not been happy with bonuses being scrapped and were particularly disgruntled about lacklustre salaries paid to the 'worker bees'. They threatened strike action, backed by the Unite union which threatened to sting the regulator.

Mr Rathi has acted, perhaps realising that thousands of unhappy staff are not likely to reward him with maximum performance and better regulation. 

This week he introduced a generous pay offer which will push up basic pay for nearly all staff, but particularly lower paid staff.

You can view the offer here: https://www.fca.org.uk/publication/corporate/fca-employment-offer.pdf

As part of the offer, around 800 of the FCA’s lowest paid staff will get average basic salary increases of £4,310. Other salary increases and performance related pay will boost overall increases for lower paid staff to an average of around £5,500 each, the FCA says. 

Under the new deal most staff not part of this increase will get a minimum salary increase of over 9% over the next two years. At the same time discretionary bonuses will be axed for all staff from next year, with the final bonuses paid to the highest performing FCA workers in April. 

It would be wrong to suggest that the FCA is trying to buy off staff insurrection but there has clearly been trouble brewing. To be fair, staff may also have been worried by rising inflation and costs are rising for everyone. Wage rises are on the agenda.

One issue at the FCA is the huge gap between higher paid staff, directors and senior managers, and lower paid staff. Under the new offer directors based in London would be in a pay range from £172,000 to £258,000 while heads of department would earn between £112,000 to £168,000, pretty generous by most standards but particularly so at what is effectively a governmental agency. It’s worth considering at this point that a top paid head of department at the FCA would be on a higher salary than the Prime Minister who had a salary entitlement in 2020 of £161,866.

More than a few FCA senior staff would have to take a considerable pay cut to be Prime Minister.

However, lower down the spectrum at the FCA it’s less rosy. A professional support worker, one of the lower grades, would earn between £24,000 and £36,000, not an over-generous salary in central London and that’s after the substantial pay increase on offer. Of course they do have lots of room to progress up the FCA ladder with a Civil Service-style pay banding scheme offering multiple levels of promotion and even middle managers can earn £50,000 to £70,000.

It remains to be seen whether Mr Rathi will have done enough to head off the unions but staff will no doubt consider the offer seriously. 

For many of the regulated I suspect the offer looks pretty generous. 

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days. Follow @FPT_Kevin • If you have not yet registered for Financial Planning Today as a subscriber please do so now. It's free to sign up.