Pay cut for city watchdog chief

Howard Davies: Paying the price

Howard Davies, chairman of the City watchdog Financial Services Authority (FSA), has had his pay cut due to poor performance.

Mr Davies told the BBC Radio 4's Money Box programme his pay was cut by nearly £14,000 last year because of problems over the troubled insurance company Equitable Life.

This disclosure comes at the end of a week in which the government published a highly critical report into the regulator's handling of the crisis at Equitable Life.

When asked whether his performance-related bonus would be cut, Howard Davies revealed that his pay packet had already been cut by the FSA board directly.

Thousands of policy holders have seen their investments slashed after the Equitable Life admitted that it could not afford to pay out the returns on pensions that it had originally promised.

Failure to spot issues

After losing a costly battle in the High Court, the life assurer closed its doors to new business last December.

But many critics say the crisis could have been avoided had the FSA intervened sooner.

This week's Baird Report said there were occasions when the regulator did not spot issues to be addressed nor did it follow them up.

Mr Davies' bonus was cut by £13,900 last year, leaving him with total pay of £341,000.

The FSA confirmed that two other directors, Michael Foot and Philip Thorpe, also had their bonuses cut by £8,850 each because of the problems over Equitable.