Financial Services Authority unveils hiring spree despite abolition threat

Aggressive manifesto may be its last as Tories plan to abolish the regulator

The Financial Services Authority is to toughen up its enforcement drive with a "harsher stance" on market abuse, involving a heavy recruitment drive, in an aggressive manifesto that may also be its last.

The City watchdog yesterday unveiled its annual business plan for the year. The 72-page document revealed a change of philosophy, ditching "light touch" regulation in favour of direct confrontation of wrongdoing.

Yet the regulator faces an uncertain future as the Conservatives have pledged to break up the FSA if they win the general election.

Hector Sants, the outgoing chief executive, hoped the change in philosophy and regulatory approach could head off such a move, saying it was "structure neutral". He added that its break-up would cause "significant structural disruption" and in requiring an Act of Parliament would take at least a year.

The uncertainty was not "helpful to staff morale or hiring," Mr Sants conceded, but he remained confident that the FSA would hit the proposed target of 460 new employees over the next 12 months to bolster the intensive supervisory agenda. He said the "proactive approach to supervision requires significantly more people than the old reactive model".

Bill Haynes, the chief executive of the financial services recruiter Verridian, said: "The uncertainty isn't going to be helpful. Recruiters will have to do a bit of reassuring that there is a future for the FSA."

Mr Sants said the hiring plans were "consistent with the rates of hiring over the past 12 months," adding that the recovery of the financial market firms competing for employees would prove more problematic. This new "get tough" attitude has seen the FSA land its highest profile conviction when the former Cazenove partner Malcolm Calvert was sentenced to 21 months in jail for insider dealing last week.

In the past 12 months there have been three insider dealing prosecutions and "a number" of other individuals charged with both insider dealing and making false and misleading statements to the market.

Mr Sants said that insider dealing was "unacceptably high" and that the FSA would bring more enforcement and criminal cases in the next year. The annual funding requirement will rise 9.9 per cent to £454.7m, because of the supervisory enhancement programme and the recruitment drive.

Mr Sants said: "We recognise that any increase in fees is unwelcome, particularly in the current climate; however, the switch to intensive supervision has necessarily required costs to rise. If society wants a more proactive approach, it must accept that it will have a larger and more expensive regulator."

He stressed how different the FSA had become since 2001, when the budget was £296m and a staff of 2,000 regulated 9.400 firms. The projected 3,700 employees will this year cover 27,000 companies. "The FSA is now a wholly different organisation to that which existed before the crisis, with a new regulatory philosophy, new operating model and culture," he said.

Mr Sants said the shift "from retrospective intervention to proactive challenge" would include conducting annual stress tests for all major financial institutions, and a rise in mystery shopping and on-site visits to retailers. "This new approach is radically different and is built on the essential cornerstone of the intensive supervision strategy," Mr Sants said.

"This will be great if the FSA gets it right," Dan Hyde, of Cubism Law, said. "They just have to take care not to over-regulate and make the City anti-competitive."

Talking tough: Turner speaks out

Having irritated Britain's banks by describing them last summer as "socially useless", FSA chairman Lord Turner last night added insult to injury, insisting he did not regret the remark and adding that "economically useless" might have been a better description.

Lord Turner said banking reform should go further than authorities currently plan and warned against focusing only on making banks smaller or narrower.

The regulator, who also said there was a case for a financial-transactions tax, added: "We need to deploy a range of regulatory and macro-prudential tools, informed by a philosophy deeply sceptical of past arguments that financial liberalisation, innovation, and deepening is axiomatically beneficial."

Start your day with The Independent, sign up for daily news emails
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor
The ZX Spectrum has been crowd-funded back into play - with some 21st-century tweaks

The ZX Spectrum is back

The ZX Spectrum was the original - and for some players, still the best. David Crookes meets the fans who've kept the games' flames lit
Grace of Monaco film panned: even the screenwriter pours scorn on biopic starring Nicole Kidman

Even the screenwriter pours scorn on Grace of Monaco biopic

The critics had a field day after last year's premiere, but the savaging goes on
Menstrual Hygiene Day: The strange ideas people used to believe about periods

Menstrual Hygiene Day: The strange ideas people once had about periods

If one was missed, vomiting blood was seen as a viable alternative
The best work perks: From free travel cards to making dreams come true (really)

The quirks of work perks

From free travel cards to making dreams come true (really)
Is bridge the latest twee pastime to get hip?

Is bridge becoming hip?

The number of young players has trebled in the past year. Gillian Orr discovers if this old game has new tricks
Long author-lists on research papers are threatening the academic work system

The rise of 'hyperauthorship'

Now that academic papers are written by thousands (yes, thousands) of contributors, it's getting hard to tell workers from shirkers
The rise of Lego Clubs: How toys are helping children struggling with social interaction to build better relationships

The rise of Lego Clubs

How toys are helping children struggling with social interaction to build better relationships
5 best running glasses

On your marks: 5 best running glasses

Whether you’re pounding pavements, parks or hill passes, keep your eyes protected in all weathers
Joe Root: 'Ben Stokes gives everything – he’s rubbing off on us all'

'Ben Stokes gives everything – he’s rubbing off on us all'

Joe Root says the England dressing room is a happy place again – and Stokes is the catalyst
Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada