The Financial Services Authority (FSA) said the total budget for regulation would fall in the next financial year to pounds 153.9m, a 3 per cent cut in real terms. Sixty jobs will go from the nine regulators that are being merged into the FSA, leaving 1,715 staff to carry out the same tasks.
The FSA is facing a struggle to attract skilled staff from financial services companies while pay in the sector is rising by 9.6 per cent. Howard Davies, the FSA chairman, yesterday said more staff from the City would be welcome. But he admitted the regulator could not match some of the glittering bonuses which are being paid this year.
"On the whole, financial services institutions are not long on good quality staff. We are aiming to pay market-related salaries somewhere between the median and the top quartile. But we cannot match investment bank-type bonuses," Mr Davies said.
Five months after it began to fill top-level posts, the FSA is still looking for a director of investment business, a finance director, a director of supervision of exchanges and a consumer relations director.
The FSA said it would need up to 250 further staff by the year 2000, when its scope will be extended to police new areas such as the Lloyd's of London insurance market. The budget would rise when these areas came under its ambit, Mr Davies said.
Keith Oates, deputy chairman of Marks & Spencer, was yesterday appointed to be a non-executive member of the FSA's board. He is one of two members of the 14-strong board with no regulatory background.
The FSA plans to step up the concept of the regulatory "one-stop shop", to allow consumers and companies to get full advice from one point of contact.
Supervision of banks is expected to switch from the Bank of England to the FSA by 1 June, when the Bank of England Bill comes into force. The super-regulator will move its senior staff to temporary accommodation in Canary Wharf, east London, by the end of April.
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