Financial Services Authority to hire 460 new staff

The City regulator revealed today it will hire an extra 460 staff to toughen up supervision of the financial sector.

The Financial Services Authority (FSA) said annual staff costs will rise by a further £47.7 million to £350 million as it beefs up its workforce by around 14% this year.

The watchdog said it needed more and better staff to help it beef up its efforts on regulation, reflecting a more "confrontational" approach outlined in today's business plan for the year ahead.

It is recruiting with immediate effect and will take on new office space in London's Canary Wharf district to house the additional staff, despite uncertainty over the future of the FSA following the general election.

FSA chief executive Hector Sants said: "This proactive approach to supervision requires significantly more people than the old reactive model and those individuals must be of a higher quality and supported by more sophisticated systems."

The FSA will take more action to tackle insider dealing after Mr Sants admitted this week that market abuse was at an "unacceptably high level".

Mr Sants, who will step down as chief executive this year, said "credible deterrence" was at the heart of plans to tackle market abuse.

The FSA has already succeeded in three insider dealing prosecutions in the last year, the most high profile recently resulting in a 21-month jail term for Malcolm Calvert, a former head of market-making at Cazenove.

The watchdog is to take on another 100 staff in enforcement, which will add to an existing workforce of some 500 people.

It is also recruiting another 260 supervisory workers and around 100 to deal with new European Union insurance rules.

The expansion is being funded by a 9.9% rise in regulatory fee requirements to £454.7 million.

Total staff numbers will rise from around 3,300 to more than 3,700, but FSA employees will see their pay frozen in 2010/11, the regulator confirmed.

Today's business strategy announcement also reiterates the action the FSA plans to take in terms of consumer protection.

It said last Friday that it will vet products to ensure they are suitable before they go on sale, rather than focusing on helping consumers get redress once problems emerge.

The FSA currently waits for clear evidence that a product has been mis-sold and consumers harmed before taking action.

The regulator will work closely with firms as they develop financial products to see if they contain risks for consumers, before they are made widely available.

It will also look at how products are promoted and sold, with FSA staff posing as mystery shoppers to try to spot potential mis-selling scandals before they develop, while they will also carry out on-site visits at firms.

The FSA's plan for the year ahead reflects the Financial Services Bill currently going through Parliament, which will hand a statutory role for ensuring financial stability to the FSA.

But it is unclear what lies ahead for the FSA after the general election, as the Conservatives have already said they would scrap the regulator and instead hand responsibility to the Bank of England.