The Financial Services Authority has said it intends to cut its headcount by 300 over the next three years. Headhunters say those axed will be snapped up by banks.

FSA chief executive John Tiner is reportedly looking for a 10% cut in numbers by 2010, as the watchdog pulls back from trying to enforce thousands of rules and moves to a system of regulation based on broad principles.

While the reduction is mostly expected to come from natural attrition, any ex-FSA specialists who come onto the jobs’ market will be sought after, says Chris Hickey of headhunter Robert Walters.

“I don’t think FSA candidates will find it too hard to move, especially into the investment banking side. Authorisation and policy enforcement are two of the areas most in demand,” he says.

The FSA-led governance and enforcement regime and the arrival of new European trading regulations such as MiFID next year has pushed issues such as policy enforcement and compliance much higher up the agenda, he adds.

Any influx of ex-FSA specialists will, inevitably, make the recruitment market more competitive.

But, Hickey points out: “I don’t think it will make too much difference to pay and salaries.”

The market for this type of specialist is definitely hot, agrees Matt Fox at recruiter PSD.

“There are some really outstanding individuals within the FSA who are increasingly sought out by the market,” he says.

“The market in Q4 shows no sign of a significant slow down as yet, which for the top candidates looking at a potential move in 2007 has to be a positive,” he adds.