Staying away from the FSA

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Lambasted over its Northern Rock shortcomings, the FSA needs to hire lots more people. Trouble is, it can't keep hold of those it's already got.

The true extent of the FSA's Northern Rock-related ignominy will become apparent tomorrow when it unveils the results of an internal review of its shortcomings. All indications are that review will come clean on the regulator's 'mistakes' and pave the way for a hiring spree.

The Telegraph predicts the FSA will commit itself to hiring an additional 100 staff to work in risk analysis and supervision, thereby ensuring there are no more Northern Rocks in the foreseeable future.

It's a laudable aim, but hiring's only half the problem. The Financial Times reports that one third of the FSA's staff intend to go and work somewhere else within the next two years. The 100 new supervisors lured through the FSA's doors are therefore liable to encounter around 800 former staff making for the exits.

What can the FSA do to stick a foot in its revolving door? Chris Rexworthy, who was its head of wholesale investment firms until the end of 2006 and is now director of institutional business at IMS Consulting, says it could always go back to hiring experienced ex-industry professionals instead of training up footloose graduates who are likely to quit once the three-year training programme's over.

"Inexperienced people tend be more mobile and more inclined to build a career outside the FSA," he says.

Rexworthy believes it would also help if the FSA splashed a little more cash. Last year the average salary and bonus was 57,789, according to its annual report.

"The FSA will be paying supervisors of hedge fund managers 40k-50k a year, plus a 0-25% bonus," says Rexworthy (who set up the specialist hedge fund practice at the regulator). "But the average compliance officer in a hedge fund will earn 80k-100k a year, plus a bonus."

However, Marnie Woolf, of compliance recruiter Woolf & Co, says the FSA pays better than people think: "The FSA has brought its salaries up and people there are no longer as far below the market as they often believe."

Woolf also points out that working for the government has its advantages in times like these: ""It's about as safe a job as it gets, and the benefits are good too."