The National Audit Office has warned that a brain drain from Britain’s City watchdogs has led to their employing thousands of inexperienced staff.
In a report published today the NAO expresses grave concerns that a third of staff at the Financial Conduct Authority have less than two years’ experience while a quarter of leavers from the Bank of England’s Prudential Regulation Authority are rated “top performers”.
Amyas Morse, head of the NAO, said it was “vital” for both watchdogs to attract and retain “the right staff” to cope with the challenges arising from the financial crisis.
The report stresses the importance of effective oversight of an industry that is valued at more than £234bn and remains a vital component of the British economy.
Regulated firms paid £664m in the 2013/2014 financial year to keep their regulators running, 24 per cent more than in the previous year. The lion’s share of the increase was accounted for by the FCA. According to the NAO’s report, the PRA has cost less than the old Financial Services Authority would have done for overseeing the financial soundness of banks and insurers.
Part of the reason for the surge in FCA costs is that it has become embroiled in a series of expensive and time-consuming investigations. The report also warns that both regulators must show they can provide value for money.
A spokesman for the FCA said: “Having the balance between experience and those who can bring a fresh perspective is important for the regulator to work effectively. In recent months we have made a number of high-profile appointments. …
“We have the right team with an experience of working inside the regulatory regime and outside to build on the work of our first year.”
Big names hired this year include Rob Taylor, formerly head of Kleinwort Benson, as head of wealth management; James Kelly, a managing director at Goldman Sachs, who will advise on wholesale banking and investment; and Julia Hoggett, of Bank of America Merrill Lynch fame, who will head investment banking.
However, many firms privately say it is in the middle ranks, made up of the people they see day to day, that the watchdog is seriously lacking.
A Bank of England spokesman said the bank was “pleased the NAO has recognised the skills of PRA staff”.
“Our task is to ensure that we retain and attract a wide range of skilled and experienced staff.”Reuse content