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London-based law firm Reynolds Porter Chamberlain (RPC) has criticised plans from the Financial Services Authority (FSA) to vet candidates for roles within influential financial services organisations, Citywire reports.
Jonathan Davies, partner of RPC, said there was a danger that information on unsuccessful candidates could be leaked if the regulator became involved in the shortlisting process and warned the move represented a 'considerable expansion' of the FSA's powers.
"There is an overarching question at stake of who should be managing financial services companies. The deeper the involvement of the FSA in the recruitment process, the more they risk moving from just regulating the sector to actually controlling its development — from weeding out bad apples to choosing favourites," said Davies.
"Both candidates and institutions will be very concerned that a shortlist will leak into the marketplace. Possible candidates for appointment who are not ultimately successful will not want the fact they were considering leaving their current job to become known to their employer."
He added "it is vital that the FSA provides clear assurances that it will put robust precautions in place to prevent leaking."
The regulator has recently written a strongly-worded 'Dear CEO' letter to the heads of more than 5,000 regulated companies stating that it wanted to review the entire shortlist of candidates for new positions as part of continuing monitoring processes.
The regulator wrote "High impact firms subject to close and continuous monitoring [are] to engage with us at an early stage of the recruitment process for the roles of chair, chief executive and senior independent director."