Outlook: Roll up for derisory pay

"Long hours, derisory pay, but high interest quotient". Here's a job offer most City folk won't find hard to resist. So desperate has Howard Davies, chairman of the Financial Services Authority, become in his search for suitably qualified practictioners to fill key positions at the new City regulator, that he's written directly to firms appealing to men of decency and honour to step forward and do their duty.

Unfortunately, these are not the sort of jobs most people would want to take a pay cut to fill. Mr Davies has already attracted some big names from the capital markets and financial services industry to the main board of the FSA, but those positions are part time, non executive and prestigious - a good thing to have on the old CV. The ones he's now trying to fill are a couple of levels down, the anonymous hard grafters, not quite the foot soldiers but not much above senior officer rank either.

Regulators have always found it hard to attract employees from the other side of the fence, though there are notable exceptions. Andrew Winckler, chief executive of the SFA's forerunner, the SIB, is one, as is his head of the markets and exchanges group, David Pritchard. Both of them came from the City. But on the whole it's a one street with the signs pointing very clearly towards the glistening streets of the City. The Bank of England's supervision department has been a constant and happy hunting ground for the City's much more highly paid risk management positions.

The FSA obviously needs experienced practitioners if it is adequately to understand the often highly complex nature of the markets and businesses it has to regulate. Moreover, it is plainly in the City's interests that these positions be filled by people who understand what the City's about. There is little that could be more dangerous to the City's continuing prosperity than ignorant, hostile and overly onerous regulation.

The obvious solution is that of secondment. Plainly there are drawbacks to this approach. The risk of regulatory capture, where the regulator becomes tamed by the industry, is higher if the regulator is staffed by industry placemen on two year secondments than if peopled by those prepared to cross the fence permanently. All the same, the secondment system is said to work well for the Securities and Exchange Commission in the US. There a stint at the SEC is regarded as an essential stamp on your passport to the top. The FSA needs to aspire to similar status.