There has been a 128% leap in the number of staff resigning from the FSA in just one year as the government proposes to abolish the regulator, according to City law firm Reynolds Porter Chamberlain LLP.
According to data released to RPC following a Freedom of Information Act request, 121 FSA staff resigned in the second quarter of 2010, 128% more than the same period in 2009 when 53 staff resigned.
RPC says that the rush of staff leaving the FSA will prompt concerns among financial services firms that:
- it will take longer for them to get regulatory approval from the FSA on key issues such as launching a new business or appointing senior personnel
- the quality of decision making by the FSA might decline.
Jonathan Davies, partner at RPC, comments: “The FSA’s staff have been leaving in droves because of uncertainty over the Regulator’s future. This kind of exodus cannot have a positive impact on the FSA’s ability to function.
“The reform of the financial services sector is not over and the City faces many challenges including banking reform and the implementation of Solvency II. Until then stability at the Regulator is important – the financial services sector and consumers aren’t getting that.”
RPC recently reported that businesses are having to wait longer for FSA authorisation. The average number of weeks it takes the FSA to decide whether to authorise a company to do financial services work jumped 71% last year, up from 11.4 weeks in Q1 2009 to 19.5 weeks in Q1 2010.
Davies: “The FSA has been taking longer and longer to authorise financial services firms and with this number of people leaving, authorisations and other regulatory functions are likely to take even longer.
“The FSA will exist in its current form for at least another six months and will no doubt have to make decisions that will have a major impact on regulated businesses. They will want to know that the best possible personnel are working on their cases.
“Businesses often complain that just as their FSA supervisor gets to know their firm he or she moves on. The huge increase in resignations suggests this must be happening more frequently.”
RPC points out that 183 staff resigned from the FSA in the first six months of 2010 to July 2, which is already more than for the whole of 2009, when there were 180 resignations.
RPC says that there were 69 resignations from the FSA in the two months after the election (May 6 2010 to July 2 2010) as the rate of staff loss accelerated as it became clear that dramatic changes to the FSA would be made.