The Financial Services Authority is awarding its staff pay rises well ahead of inflation to stop them quitting to join the nearest investment bank.
The super-regulator, which acquired tough new powers to combat insider dealing and market abuse in November, yesterday said it would launch a recruitment drive, which would see average salaries for those staff involved in mainstream regulationrise by 7.4 per cent. Last year wage inflation in the financial services sector was some 6 per cent.
Carol Sergeant, the FSA's managing director for risk assessment, said: "We still have a big catch-up job to do on salaries. We don't pay bonuses or give share options, and people are still leaving the FSA for much higher salaries outside."
She said the projected £180.5m budget for 2002-03 was modest beside those of many Government departments, not least given the size of the financial services industry.
While the FSA's wage bill will rise by £13m, to £125m other overheads will fall. In the current financial year, the regulator, headed by Sir Howard Davies, is expected to bust its £167m budget by £1.1m because ofa costly review into insurance regulation launched after the crises at Equitable Life and Independent Insurance.
Much of next year's increased spend will go towards recruiting additional supervisors to keep tabs on the insurance industry, amid deepening concerns over reporting standards and funding liabilities. Insurers will fund the moves through an increase in the fees they pay as regulated firms.
The FSA also said it aimed to take a more pro-active approach, and would cut much of its routine regulatory activity. In particular it was diverting resources out of banking supervision, which appeared to pose far fewer risks than the insurance sector over the next year.Reuse content