The FCA lost £29.3m in its first year, its annual report shows, due mainly to pension costs inherited from the FSA.
The regulator made the loss in the year ended 31 March due to a deficit after tax of £2.9m and an actuarial loss of £26.4m, mainly because of the cost of retaining the FSA's defined benefit pension scheme.
Year on year fee income fell by £13.6m from £449m to £435.4m, driven mainly by the FCA returning an extra £8.9m to fee payers compared to the previous year's returns by the FSA.
The annual reports also shows that total remuneration packages paid to senior executives at the FCA mostly fell as bonuses have been withheld until the outcome of the independent investigation into the handling of the FCA's announcement of proposed supervisory work in the life insurance sector. There investigation was launched after complaints from life insurers that their share prices fell sharply due to leaks about an FCA probe into 30m life insurance policies.
The FCA's Executive Remuneration Committee will reconsider bonuses once the outcome of the investigation is known, the report published today says.
The annual report shows that because of bonuses being withheld the total remuneration package of FCA chief executive Martin Wheatley fell from £667,000 in 2013 to £610,000 in 2014. Senior directors total remuneration packages were Clive Adamason (£324,000), Tracey McDermott (£329,000) and Lesley Titcomb (£315,000). In contrast, the total remuneration package of chairman John Griffith-Jones rose from £111,000 in 2013 to £192,000 mainly due to a rise in his basic salary or fee. This was due to him starting his job as chairman in April 2013, part way through the year, and the FCA says his annual fee overall is unchanged.
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Many non-executive directors saw remuneration increases for the year, including Financial Planner Amanda Davidson up from £35,000 to £45,000 and consumer lobbyist Mick McAteer by the same amounts. This was due to them taking on extra responsibilities as sub committee chairmen, says the report.
The total number of full-time equivalent FCA employees rose from 2,451 to 2,511as the FCA took on some extra responsibilities but the median remuneration of employees fell from £64,301 to £62,616. Employee remuneration ranges from £15,623 to £328,284.
In the report, Martin Wheatley, FCA chief executive, said: "It has been a challenging and productive year as we have adapted to a widened regulatory remit, providing us with new responsibilities in competition, consumer credit and the oversight of LIBOR, while also tackling historic and emerging issues affecting the industry and consumers."
FCA chairman John Griffith-Jones, writing in the report, said that the industry welcomed the focus on conduct and was now more actively engaged with the regulator and more committed to ensuring better outcomes for consumers.
He added: "We are far more engaged in what is happening for consumers; we are using the eyes and ears of the millions of people who use financial products to help inform and direct our work. The change in our focus has been broadly welcomed by industry and the response we have had from firms has helped us achieve some positive outcomes."
"I have seen boardrooms across the country think about how they can put the consumer at the heart of the way they do business. What we want to see now is that change filter down to everyone involved in meeting consumer needs."
The annual report also covers key work undertaken by the FCA in its first 12 months which includes:
· Warning for customers on interest only-mortgages
· RDR six-month review
· How the FCA intended to regulate consumer credit and payday lending
· New rules under the Mortgage Market Review
· Retirement income study
The FCA will host its first Annual Public Meeting on 17 July 2014 at the Queen Elizabeth II Conference Centre in London where members of the public can ask questions about the annual report.