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NAO warns on high FCA staff turnover

High staff turnover rates at the FCA and Prudential Regulation Authority risk undermining confidence in the regulators, according to a report by the National Audit Office.

The report found that more than a third of staff at the FCA have less than two years’ service at the regulator and its predecessor the FSA, while 26 per cent of those who have resigned from the PRA are classed as ‘high performers’.

Staff turnover was 9.7 per cent at the FCA in 2013, and 11.7 per cent at the PRA.

The report says: “Both regulators are working to develop long-term strategies to attract the best talent. However, current levels of staff turnover result in the consistent departure of skilled and experienced staff.

“This could undermine industry confidence in the regulators, poses a risk that knowledge will be lost within the organisations and impacts on the regulators’ capacity to carry out their functions.”

The report also found the combined cost of the FCA and PRA is £664m for 2013/14, 24 per cent higher than the cost of the FSA in 2012/13.

It says the regulators attribute the increase to additional front-line staff, and the costs of running two regulators instead of one, including new IT, support and premises costs.

The NAO says in future it will expect the regulators to demonstrate the value they are achieving for consumers and how they are addressing the problem of attracting and retaining the right staff.

The NAO’s recommendations for the regulators include reviewing the impact of staff turnover rates, and evaluating the cost to firms of regular data requests.

NAO head Amyas Morse says: “These are still early days for the new regulators, and there are encouraging signs that their new approaches are gaining traction.

“Attracting and retaining the right staff are vital to keeping this progress on track, and so both regulators need to tackle this issue.”

An FCA spokesman says: “The fees charged enables us to regulate effectively and cover our wide-ranging remit, but equally it is important we deliver our services in a way that provides value for money.

“Having the balance between experience and those who can bring a fresh perspective is important for the regulator. In recent months we have made a number of high profile appointments who have considerable experience acquired over a number of years in the industry. We have the right team in place with experience inside the regulatory regime and outside it to build on the work of our first year.”


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradley ceo Panacea Adviser 25th March 2014 at 11:26 am

    “An FCA spokesman says: “The fees charged enables us to regulate effectively and cover our wide-ranging remit, but equally it is important we deliver our services in a way that provides value for money”

    The FCA spokesman may wish to read the ‘Regulators Code”, a useful guide that may assist in focussing minds around recruiting and retaining the right people .

    The code is based on the Hampton Principles and states regulatory activities should be carried out in a way which is transparent, accountable, consistent and proportionate; and that regulatory activities should be targeted only at cases in which action is needed.

    The following are among its stated aims and intentions consideration-

    To act as an enabler to economic activity.
    To consider the impact that their regulatory interventions may have on economic progress, including the costs, effectiveness and perceptions of fairness of regulation.
    They should ensure that any decision to depart from any provision of the Code is properly reasoned and based on material evidence.
    Where there are no such relevant considerations, regulators should follow the Code.
    They should only adopt a particular approach if the benefits justify the costs and it entails the minimum burden compatible with achieving their objectives.
    Regulators should seek to reward good levels of compliance by way of lighter inspections and reporting requirements where risk assessment justifies this.
    They should also take account of the circumstances of small businesses, including any difficulties they may have in achieving compliance.

    The Regulators code of 2007 is seemingly continuing to be overlooked by the FCA in may areas. It spells out clearly what it is not being applied to the thinking of the regulator in establishing a post RDR world.

    You can access it here:

  2. brian weatherley 25th March 2014 at 11:41 am

    Why are they resigning? Simple. There are those who genuinely believe the new regulatory arrangements constitute a busted flush. As such some are voting with their feet- perhaps at personal cost. Importantly, they are reflecting, perhaps, many advisers and the reservations held prior to, during and post RDR.

  3. This is part of the reason why the FCA needs to move out of London to a place where they will be able to acquire and retain quality staff, instead of overpaying for the people that the big city banks don’t want.

  4. “The fees charged enables us to regulate effectively …”

    Which planet are they on?

    Clearly not the same one as all those who have lost their savings as a result of unprofessional regulation and incompetence.

    When organisations express concern over staff retention, it usually means they are about to press for higher pay. The previous contributor was right, they should move out to the sticks and pay less for both offices and people.

  5. Perhaps that should read “The fees OVER-charged enable us to regulate effectively and cover our wide-ranging remit”. Except, so far, they don’t.

  6. I think this says more about the failings of the senior management than anything else !

    From what I can gather from the employment package that people get; its pretty damn good !!!

    People (“high performers”) don’t leave a job with such good salary & benefits for no good reason (there are not that many jobs out there on the level of this one to suggest job hopping) which leads me to believe that there is massive problems with the bosses and fellow senior staff ?

    Maybe they treat the bottom rung staff like they do IFA.s ?

    As for the people at the top we all know they only leave once they have secured nice little earners at some audit office, bank etc etc etc etc

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