Will there be a strike at the FCA?

The FCA has been developing plans for significant reforms to pay and conditions for staff, recently confirming that it will scrap discretionary cash bonuses, which had come under scrutiny from the Treasury Select Committee, for all staff from next year. 

Unite, a trade union which represents staff working at the FCA, has raised a number of concerns regarding pay and conditions at the FCA, which it describes as follow: 

• "A swingeing package of pay cuts, including: the loss of routine payments misleadingly labelled ‘bonuses’ (10-12% of salary), the narrowing of pay bands, lower pay bands for Scottish staff, cuts affecting graduate trainees, and a threat of future cuts to pensions".
• An unfair appraisal system which requires managers to arbitrarily downgrade employees who are performing well.
• Continuing high levels of pay inequality, which are unusually high by the standards of public sector regulators. Bafflingly, while pay bands for most staff are being ruthlessly squeezed, those for senior managers are being uprated. Already the FCA has around 40 executives who earn more than the Prime Minister. Persisting problems with staff leaving and difficulties in recruiting replacements. The FCA has yet to provide a full set of figures showing the scale of this exodus."

In a non-binding indicative ballot of Unite members at the FCA, they voted by 87% in support of industrial action. Unite has called on the FCA to negotiate and has contacted ACAS, to mediate in the dispute. Unite has said that the next step if the FCA chooses not to negotiate will be to hold a formal statutory ballot for industrial action.

There is strict legislation regarding the process for statutory ballots and the time of these and any industrial action set out in the Trade Union and Labour Relations (Consolidation) Act 1992, meaning there will be significant notice of any industrial action at the FCA. 

The Trade Union Act 2016 also requires a turnout of at least 50% of union members for industrial action. This is a significant hurdle. For example, the Universities and College Union had to reballot 42 branches that did not reach the threshold the first time it balloted on industrial action last year.  

There is significant concern in the market regarding the potential impact of industrial action on the FCA and the state of staff relations. This is especially the case given loss of staff at the FCA and delays with with FCA processes, such as the two month delay in appointing case officers for change in control applications. Authorised firms will be hoping that the dispute can be settled quickly leaving the FCA to focus on improving the services it provides and its duties as a regulator. 

Omar Salem is a Managing Associate in the Financial Regulation Group, Linklaters, London.