Staff are fleeing the UK financial watchdogs, the Financial Conduct Authority and Prudential Regulation Authority, as salary increases lure compliance experts to the private sector.
Staff have been fleeing the UK financial watchdogs, the [tag|FCA|]Financial Conduct Authority[/tag] and [tag|PRA|]Prudential Regulation Authority[/tag], since their formation earlier this year, said a report from Reuters.
According to data provided by the two bodies under Freedom of Information Act requests by Reuters, staff have been leaving the FCA since its formation at an annualised rate of 12 per cent and the PRA at a rate of 11 per cent.
By contrast, staff turnover in the final year of the now-defunct FSA was 6.9 per cent, with a 7.8 per cent average per year for the past five years. This doubles the rate of resignations since the two regulators replaced the Financial Services Authority on April 1 2013.
The information comes at a time when experts warn of a regulatory brain drain in Europe's biggest financial hub, London’s City. The amount of resignations raises concerns about the new bodies' ability to retain staff capable of carrying out tougher, more interventionist regulation.
Ironically, the report came out shortly before Hector Sants, who had been chief executive of the FSA, resigned due to ill health from his post as compliance and regulatory head at Barclays, a position he had held since being appointed late last year.
"It's a concern for regulators and they will continue to see a tremendous amount of pressure on keeping their employees," Etay Katz, regulatory partner at law firm Allen & Overy, was quoted by Reuters as saying.
Some 162 out of about 2,575 staff left the FCA during its first six months of operation, and 50 out of about 1,080, including 11 temporary workers, left the PRA during its first five months, the data showed.
Most of the departing staff at the FCA were replaced with net staffing down by just 22 people at the end of September. Conversely, most of those who left the PRA have not been replaced, with the overall headcount down by 37.
Notably, the exodus includes top figures, with the PRA having lost its deputy chief Paul Sharma and senior supervisor, Jean Moorhouse, and the FCA losing its acting director of retail, Christina Sinclair. All left for the private sector, where staff typically earn more than at the regulators.
Competition in this part of the industry has been particularly stiff in recent years, as City firms and consultancies have added thousands of compliance, risk and legal employees to deal with the influx of regulation.
"The more the regulatory pressure increases, so does the risk of the FCA and PRA losing staff. It really can become a vicious circle," Allen & Overy's Katz said.
"My concern is more on the FCA side. How are they going to attract the calibre of people when banks are paying two or three times as much?"
Despite the increase in departures, an FCA spokesman said staff turnover was broadly in line with historical rates at the FSA and low given the huge changes of the last year. Both the FCA and PRA told the news service that they continued to attracted talented people.