The Conservatives will attempt to lure top City lawyers into the public sector with the promise of improved salaries should they take power at the next general election.

Outlining Conservative policy for financial regulation on Monday, shadow chancellor George Osborne said he would scrap the FSA in favour of an enlarged, more powerful Bank of England. Salaries at the new-look Bank would be upped in order to ‘recruit and retain high-quality regulators’, including specialist City regulatory lawyers.

Mervyn King, governor of the Bank of England, earned around £300,000 last year. A top magic circle partner is likely to have earned between £750,000 and £1.5m last year. The Conservatives noted that it is ‘unrealistic to imagine that regulatory salaries can ever match the highest salaries in the private sector.’

Under the Tory plans, a new financial policy committee would be set up at the bank to consider national and international regulatory issues, while a new financial regulation division would be responsible for regulating the UK’s financial institutions. Consumer protection would be handled by a separate consumer protection agency. The higher salaries will be paid for by an increase in the industry levy.

Many existing FSA staff, including a number of former City lawyers, would be likely to transfer across to the bank.