Recommendation 127

Witnesses suggested that an important constraint on the FCA and PRA employing staff with experience of the sector is the level of remuneration offered, particularly in comparison to pay in the private sector. Noting the difficulty of recruiting and retaining such staff, the Alternative Investment Management Association told us that: “We understand that this is challenging as the FCA does not have the resources to compete with private sector pay.” 204 Moreover, we received evidence that this discrepancy has widened, as Sir Howard Davies told us: “A recent report by New Financial, … says that real pay in the regulators has fallen by 25% in the last decade.” 205 Other witnesses emphasised that matching the pay of regulators more closely to that of industry would require exemptions from public sector pay scales. Andrew Griffith MP told us: “we need to accept that, when you are trying to engage in a symmetrical fashion with very sophisticated financial counterparties, you may sometimes have to step outside the pay bands.” 206