The Financial Services Authority (FSA) should increase salaries by 50% at its successor agencies in order to prevent employees moving in to the private sector, according to one headhunting consultancy.
The firm said there was a particular need for higher salaries among staff paid between £100,000 and £250,000 as they have the experience to lead teams and stand up to the banks and carry out tougher, more interventionist regulation.
It added the regulator would need to increase its budget by around 35% to ensure the recruitment of quality staff, the Financial Times reports.
Nick Hedley, founding partner at Hedley May, said: "The good £250,000 person can move for £500,000 and the good £100,000 person can move to the private sector for £200,000. You need to close that gap.
"There are also plenty of people whom we talk to who say: ‘I thought about going to the regulator but I didn't want to take the pay cut.'
The FSA recently revealed its chairman and senior directors shared more than £2.6m in salaries, bonuses and benefits in the year to 31 March.
Chief executive Hector Sants' total earnings were £806,810, while chairman Adair Turner earned £500,276.
23% fall since Q1
More dates to be announced
Lowest level since 2016
Subset of fintech
Just one-fifth not in favour