Hall is the new director general of the BBC, returning to the organisation after 12 years as chief executive at the Royal Opera House.
Wheatley is chief executive of the brand new Financial Conduct Authority (FCA), the independent regulator that sits outside the auspices of the Bank of England unlike the PRA (Prudential Regulation Authority) and FPC (Financial Policy Committee). He returned to the FSA last September after five years as head of Hong Kong’s Securities and Future Commission.
So as well as returning to a former employer, what else do the two have in common?
Without dwelling on the immediate reason why Hall was asked to take the position after his predecessor, George Entwhistle, lasted less than two months in the role, the answer is ’ a lot’.
Disgruntled workers
The BBC is going through its own TLA (three-letter acronym) review, the DQA (the Delivering Quality First) program that will see 2,000 jobs go in the next five years. Hall has arrived just as two trade unions, the National Union of Journalists and Bectu, have returned to work after the latest in a series of strikes to protest against these cuts.
While Wheatley does not have – and is not scheduled to have – strikes to deal with, there are plenty of investment professionals angry with the way RDR has been handled and the time it has taken to be almost implemented.
RDR has seen its fair share of job losses with individuals leaving instead the industry ahead of 1 January this year as well as other job cuts coming thanks to the number of mergers and acquisitions that have happened in the past three months.
Cost cutting
The cost cutting of 20% of the BBC’s budget comes after the licence fee has been frozen (i.e. made more expensive once inflation is taken into account) and on top of new payments it is expected to make on behalf of the World Service.
The FCA is, directly and indirectly, forcing fund managers and fund buyers to cut costs to ensure they offer investors transparency of charging which is being translated across the board as offering cheaper products.
The answer in both cases is too much of a focus on price rather than value though this is, in the short term, and while not necessarily being right, almost a necessary evil as long as they are shown to be measurably cutting costs.
Too narrow a focus
The BBC and the FCA stand accused of having too narrow a focus, with the FCA between a rock and a hard place already – it is being labelled as simply a rebranded FSA, with no new focus of its own, while also being accused of over-using its new powers to ban products and thereby stifling product innovation.
Today is just day three of its official existence so neither can possibly be accurate so let us give Wheatley and his 12 good men and true a chance before strangling them with old FSA charges.
The danger of any new focus from the BBC is that when Channel Four went through something similar a decade or so ago, the answer was Big Brother so let us hope there is no repeat from Hall.
Salaries
This is where their paths diverge as the BBC has to curb its own salaries whereas the FCA has to try and fight off – if it so chooses – threats from Europe to cap salaries and bonuses that fund managers can earn.
In the FCA’s world, there is already a sort-of-cap on what intermediaries can earn through portfolio management as market forces will dictate a respectable hourly fee that will probably stop too many earning too much in the good times while forcing them to work that much harder for the same fee when times are tougher.
One challenge laid down quickly to Hall is the £350,000 a year of licence fee (public) money being paid to the BBC’s new managing director of finance and operations, Anne Bulford. Unfortunately, this is typical of the type of argument that will still be fought long after Hall has gone.
Trust and confidence
Neither is particularly high on a list of organisations that its users trust or have any great confidence in, though the BBC is better placed to rebuild that trust – we still watch the BBC after all of its travails and scandals.
The FCA on the other hand is ‘the man’; it is authority; it is the law and is always right. As ever, time will tell whether it gets its approach right or not though you can bet your bottom dollar the first whiff of scandal under its remit will be blamed on the old FSA practices. The severity of the second scandal will give a better clue as to it and Wheatley’s future.
So, if this was a straight fist fight, as the dominant player in its overseeing world Wheatley undoubtedly has the tougher job in terms of the challenges he has to overcome – all Hall has to do is make sure we do not switch channels…
