128% rise in FSA staff exits linked to proposed abolition

The number of staff resigning from the FSA has more than doubled in the past year as the government prepares to abolish the regulator, according to new research.

According to data released to City law firm Reynolds Porter Chamberlain LLP (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.

During the first six months of 2010, 183 staff resigned from the FSA – a higher figure than for the whole of 2009 when there were 180 resignations. The second quarter resignations included those of the watchdog’s three managing directors in the month following chancellor of the exchequer George Osborne’s announcement that he was pressing ahead with the regulators overhaul.

RPC partner Jonathan Davies said: “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.”

The new figures follow recent research by RPC showing that businesses are facing a longer wait for FSA authorisation.

The average number of weeks it takes the FSA to decide whether to authorise a company jumped 71% last year, up from 11.4 weeks in the first quarter of 2009 to 19.5 weeks in the same period for 2010.

Davies said: “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.”

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