The Financial Conduct Authority (FCA) is to offer 800 of its lower paid staff a pay and benefits increase worth £5,500 each.

The news, part of a major salary shake-up, comes as strike action looms at the watchdog over union recognition and the scrapping of bonuses.

The FCA says under the new deal most staff will get a minimum salary increase of over 9% over the next two years.

While the FCA will boost salaries it has, however, confirmed that discretionary cash bonuses will be axed for all staff from next year, with the final bonuses paid to the highest performing FCA workers in April. 

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

The increases also come with higher pension contributions and flexible benefits. 

The regulator adds that additionally, colleagues who meet their performance targets - approximately 85% of staff - will receive salary increases of at least 5% this year and 4% in 2023. Those who have not met their objectives this year will be “given assistance” to meet their performance objectives. 

The FCA will also pay staff who have met their performance objectives a one-off, back dated cash payment equivalent to 4% of salary in April in recognition of the “changed economic environment” since the consultation was launched in September last year.

The FCA says the pay shake-up is designed to “reward strong, consistent performance, aid career development and close pay gaps.” 

The remuneration changes follows a consultation with FCA staff and the FCA’s Staff Consultative Committee.  

Nikhil Rathi, chief executive of the FCA, said: “I’m hugely grateful for the time colleagues have spent contributing to the consultation and I understand the strength of feeling about some of the changes we are making.  We have welcomed the open debate and discussion and, with the board, considered all the feedback we have received.

“We believe we have developed a fair, competitive, and sustainable offer that will help us achieve our regulatory objectives, as well as diversity goals, that supports the lowest paid and the strongest performers, with most colleagues receiving a minimum salary increase of over 9% over the next two years and an average of over 12% over that period.”

Staff at the Financial Conduct Authority earlier this year voted to take industrial action over concerns about cost-cutting at the regulator, including the loss of bonuses. The Unite union said the proposed cost-cutting measures would turn the FCA into a “bargain basement” regulator. Unite said members have also shared fears over an appraisal system which “punishes strong performers.”