FSA hit by surge in resignations after news of dissolution

Resignations from the Financial Services Authority (FSA) more than doubled in the three months to July as it emerged that the new government would dissolve the regulator, figures reveal.

Statistics obtained by law firm Reynolds Porter Chamberlain (RPC) show that 121 staff left the FSA in the second quarter, 128 per cent more than in the same period in 2009. There were 69 resignations in the two months after the election as the prospect loomed of dramatic regulatory reform.

Jon Pain, head of supervision, and chief operating officer Mark Norris were among the 183 staff to announce their departure in the first half of the year. Chief executive Hector Sants was also set to leave before agreeing to stay on during the reorganisation of the regulator.

The government is to replace the FSA with bodies including the Prudential Regulation Authority, which will supervise deposit-taking institutions, insurers and investment banks, and the Consumer Protection and Markets Authority, which will supervise most of the 20,000 firms currently under the FSA's remit. Prudential supervision will be returned to the Bank of England, in the form of the Financial Policy Committee.

Jonathan Davies, a partner at RPC, claimed the uncertainty over the FSA's future was behind the sharp rise in departures. "This kind of exodus cannot have a positive impact on the FSA's ability to function," he said. "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."

The FSA employs around 3,600 staff, including about 60 in Edinburgh, its only presence outside London. A spokeswoman for the FSA said that while 121 people left in the second quarter, another 328 joined.

"Our staff turnover rate for the second quarter was 6.8 per cent but we continue to grow our staff numbers," she said.