Bank of England warns of staff shortages as it takes on post-Brexit powers

The Bank of England has warned that it could be a “stretch” to hire the 100 or so extra staff needed to take on new post-Brexit powers, as soaring vacancy levels fuel fierce competition for financial services personnel.

“We’re in a very challenging environment from a recruitment and retention point of view. It’s a very tight labour market,” Sam Woods, head of the BoE’s Prudential Regulation Authority told the House of Lords European Affairs committee on Tuesday.

Woods said the PRA’s “exit rate” — the percentage of staff turnover — had “ticked up” to levels last seen before the Covid-19 pandemic as the regulator contemplates hiring an extra 100 people, mostly to deal with its new mandate to write financial rules that used to be drawn up in Brussels.

Companies across the City of London have been struggling to fill posts as a post-Covid economic rebound, coupled with a wave of resignations, has caused vacancies in financial services to more than double in the year to February 2022, according to data from the Office for National Statistics.

“I’m worried [the exit rate] could go further,” Woods said. “It [retention and recruitment] is the top management challenge this year. Bringing in that many heads in this environment is actually a stretch.”

Woods’ colleague Nathanael Benjamin said the PRA was using “pooled recruitment campaigns”, where several similar roles were advertised together, as one way of attracting more candidates. The PRA is also hiring more human resources staff.

The Financial Conduct Authority, the UK’s other big financial regulator, which oversees the conduct of more than 60,000 financial services firms, is running similar campaigns on LinkedIn as it contends with staff shortages and an expanding brief, with some staff contemplating strike action over pay changes.

“We in the FCA will need to work hard on recruitment and retention,” Edwin Schooling Latter, its director of markets and wholesale policy and wholesale supervision, told the committee, adding that he thought the FCA’s hiring objectives were “achievable”.

At the same session, Woods said he had not yet seen any evidence that an almost-completed European Central Bank review would lead to “large numbers” of bank staff moving to the continent.

The ECB is in the final stages of a “desk mapping” exercise to see if banks have moved enough people to the EU to run their businesses properly, instead of relying on their London offices for key functions. Some industry insiders have told the FT the exercise could lead to a significant exodus of staff from London, which has so far lost far fewer financial services jobs due to Brexit than the tens of thousands once feared.

“So far . . . we have not see any attempt to move large numbers of staff across to the continent [as a result of the desk mapping exercise],” Woods said. “The review is ongoing . . . what we have made clear is that anything not clearly grounded in prudential standards would be problematic for us.”