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Lord Turner: MAS chief executive pay is too high

Financial Services Authority chairman Lord Turner has admitted that Money Advice Service chief executive Tony Hobman’s £350,000 remuneration package was set too high by the regulator.

Giving evidence to the Treasury select sub-committee’s inquiry into the MAS this afternoon, he said it was set in line with salaries of other FSA satellite organisations such as the Financial Services Compensation Scheme and Financial Ombudsman Service.

He said: “I am not saying at the time I said it was a bit too high, I did not do that. You are asking me now, as I look at it in retrospect, and I think it was pitched somewhat high relative to what it would be and what it should be.”

MAS chairman Gerard Lemos said it is “a lot of money” but that the level of pay was necessary to attract staff with a commercial background. He said next time the MAS is recruiting a chief executive it would start with “clean sheet of paper”.

Hobman told MPs he has already taken a pay cut, of around £25,000, and waived his performance related bonus in full.

He said: “I continue to believe that having taken the job in good faith at the rate that I was paid that I should and can demonstrate value for that. I am very acutely aware it is a substantial sum of money and I do not take any of it for granted.”

Hobman receives a salary of £250,000 per annum, with the remainder of his pay made up in benefits. In contrast the Prime Minister earns £142,500 a year.

When questioned by the business innovation and skills committee last December about whether the size of his salary was appropriate for the head of a relatively small organisation, Hobman replied that his pay would make him “hugely incentivised” to do the job.

In March, the business, innovation and skills committee called for the FSA to investigate Hobman’s salary as a matter of urgency.

Last week, Conservative Party deputy chairman Michael Fallon expressed concern that £16m of MAS’s £46.3m money advice budget was being spent on staffing and operational issues.

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