Who are they - these public-spirited financial services professionals?

The FSA is drawing nearer to its assignation with fragmentation.

In roughly 18 months time it will split into two bits. One bit will be called the FCA (the Financial Conduct Authority). The other bit will be called the Prudential Regulatory Authority and will be gently entwined with the Bank of England.

Yesterday, Hector Sants, chief executive of the FSA popped up at the Queen Elizabeth II Conference Centre and gave a speech about the PRA.

In it, he admitted that the PRA will need to equip itself with:

"High quality, experienced supervisors who are willing to make difficult judgements and command the respect of the firms they supervise."

Sants also said it will need, "more than a handful of senior executives" to act as, "dedicated individual supervisors for each major firm."

Hector is counting on the recruitment of these senior executives not being overly onerous.

"Individuals can be found who recognise the rewarding nature of the role in the wider sense and are attracted to the concept of public service," he said.

Really?

A small dose of reality

In questing for these 'public-spirited people,' Hector is likely to face several problems.

1) Public-spirited public sector workers won't be right for the job

Hector says the new SRA supervisors will need to be adept at, "indepth analysis... along with the perspective that comes with continuity of oversight and understanding of that firm's business model, management and culture. "

There are plenty of public-spirited people around. They do not tend to be particularly insightful about the business model of investment banks.

2) The regulator mostly attracts junior people who want to work there for reasons of self-interest

According to recruiters, most people join the FSA for one reason: it looks good on your CV and after a few years you can leave and get a far better paid job working in compliance for an investment bank.

"A lot of the heads of compliance at investment banks have spent time at the FSA," say Edward Manson, a compliance recruiter at PSD Group. "As long as you work in a supervisory role at the regulator where you're actually coming into contact with banks [as opposed to a policy role, where you don't], a time at the FSA is seen as a good thing."

Most compliance people tend to do their years at the regulator early in their career and are unwilling to return.

"It is possible to attract senior people like Hector [a former head of EMEA for Credit Suisse]," says Ian Mason, a partner at Baker & McKenzie and former head of the FSA's enforcement division. "But there aren't enough of them."

3) If the FSA wants to hire senior people from banks it will either need to pay them a lot more or to make them feel important

Sants earns around 750k. He also gets to make big speeches that are reported in all the newspapers.

Below Sants, things are a lot less prestigious. People are not household names. Nor are they very well paid.

"In most instances, the FSA are getting away with paying people the least they can," says one compliance recruiter. "People who move from the FSA into industry can usually get a 20-30% pay rise. They are certainly not paying market rate."

"Some people do join the regulator for the power and influence instead of the money," says another recruiter. "But they are hard to find."

Sants may have got it wrong. The PRA could yet find itself staffed with megalomaniacs rather than public servants.