The regulator is stepping up its game in the war to recruit and retain the best financial services talent, and is paying up to prove it.

In its annual report published yesterday, the Financial Services Authority (FSA), revealed that the upper limit for bonuses paid to its staff has risen from 20% to 25% of basic pensionable salary.
FSA chief executive John Tiner said greater emphasis is now being put on performance related pay, and on rewarding the highest performers in particular.

In the process, the overall bonus pot has risen from 10% of base pay in 2004-2005, to 12% in 2005-2006.

Working at the FSA isn’t quite as enticing as working at Goldman Sachs, where pay for the average employee averaged 286,000 last year, but nor is it on a par with the median across the public sector worker either.

Pay for the FSA’s 2,610 staff now averages 67,279 per person, up from 64,885 last year. According to the Financial Times, the regulator is paying salaries to rival those of high court judges and cabinet secretaries.

Unsurprisingly, people at the top of the hierarchy are best off. Yesterday Financial News reported that Callum McCarthy, FSA chairman, saw his pay (excluding bonus) jump by 15% to 436,142 last year.

The regulator is obviously doing something right. Despite the overheated hiring climate, employee turnover remained stable last year at less than 10%.