By Sean Farrell
Monday, 25 April 2011
The Financial Services Authority (FSA) lost, on average, one employee a day in the past year, in a near doubling of departures ahead of the planned break-up of the City watchdog.
Figures obtained by The Independent in response to a Freedom of Information request show that 352 employees quit the FSA over the past 12 months, compared with 181 the year before.
The departures came as the FSA prepares to be split into two: by early 2013 a supervisory arm will be transferred to the Bank of England and a separate consumer-protection agency will be created. The rate of attrition raises questions about the FSA’s ability to manage the transition and to hold on to the staff it needs.
The FSA said last month that it expected a tough year and has frozen staff numbers and put initiatives on hold to cope with the workload of the split. Hector Sants, the chief executive, admitted he expected difficulties in hiring and keeping staff.
Peter Snowdon, a partner at the City law firm Norton Rose, said: “The market has picked up a bit and FSA people are always attractive to firms because they have inside knowledge. But this seems to confirm what one hears, which is that people think the chances open to them under the new regime aren’t that great and they are looking at other options.
“It is a concern for [City] firms if the FSA is losing experienced staff because there is an awful lot of change going on and those people can steady the ship.”
The departures have included some of the FSA’s most senior figures, including Sally Dewar, the former head of risk, who left in January.
Jon Pain, managing director of supervision, also left that month before his job was eliminated under the new regime.
Mr Sants was another that was going to quit the watchdog after opposing the break-up, but he was persuaded to stay on and join the Bank of England as a deputy governor to head the new supervisory arm. Between April and September last year, 187 people left the organisation – more than the entire previous year.
That period covers the months either side of the May general election during which the Chancellor attacked the FSA’s handling of the financial crisis and called for its abolition. He finally announced his plan for splitting the regulator in June. Departures peaked at 38 in October but have remained close to the 30 mark each month since. Only 16 people left last month but March is traditionally a quiet period because staff awarded bonuses lose their payouts if they quit before 1 April.
Lindsay Reid, a compliance and regulation specialist at the recruiter Michael Page Financial Services, said the rate of departures was set to pick up as the split gets nearer.
“By this time next year, the FSA will have a clearer idea of the new structures and they are already starting to align people for when the split happens,” Mr Reid said. “Employees are understandably anxious and we have seen a marked increase in the number of candidates enquiring about roles in the new structure and asking for career advice.”
The FSA said last year’s departure rate was comparable with 2006-2007 when 326 staff members left and 2007-2008 when there were 355 departures. In 2008-09, just 206 staff employees quit. The watchdog also pointed out that it has more staff than in those years after it increased employee numbers during the financial crisis.
Kathleen Reeves, human-resources director at the FSA, said: “Staff turnover levels fell during the crisis but are now starting to return to the level you would expect as recruitment picks up in the financial-services sector.”
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