While not necessarily the best of friends, it would be fair to say the Financial Services Authority (FSA) and in-house lawyers have traditionally got on well. In a Legal Week Benchmarker survey last year, 71% of in-house lawyers said the organisation was an effective regulator, while a further 20% described it as highly effective.

General counsel Andrew Whittaker, who heads up the FSA's 50-strong core legal team, thinks corporate counsel are less likely to be suspicious of the UK regulator than their non-legal business colleagues.

"It is possible that they have a different perspective from their organisations. Lawyers are often better able, as a result of their training, to see both sides of an issue and that probably helps," he says.

Corporate counsel certainly adopt a more conciliatory tone towards the UK regulator than the City's private practice partners, some of them ex-FSA lawyers who now sit on the other side of the fence representing firms that have attracted the regulator's eye.

Do such partners have a special insight into the workings of the FSA or is it a part of their sales pitch to criticise the regulator at every opportunity?

"There are probably some individuals whose niche is representing clients in discussions with the FSA where the pitch is 'if you want a fight with the FSA, come to us'," says Whittaker, with the measured style that those who have worked with him say is one of his characteristics. "I do not think it necessarily means that law firms see a different side of us, but sometimes we are on different sides of the argument."

Whittaker's own days in private practice are now long behind him. He took his articles at McKenna & Co and spent a couple of years after qualifying working for Boodle Hatfield, followed by three-and-a-half years at the Department of Trade and Industry. After this he joined the Securities & Investment Board in 1985.

Whittaker led the team that worked on the Financial Services and Markets Bill, which led to the creation of the FSA, and which he joined on its foundation as deputy general counsel. He succeeded Michael Blair as the regulator's general counsel at the start of 2000.

It is no secret that City law firms encircle the regulator like vultures, attempting to lure away its in-house lawyers with substantial pay packages to win inside knowledge for their financial regulatory practices.

It is a strategy that appears to have worked in the regulator's enforcement division where, apart from enforcement head Margaret Cole, who joined the regulator from White & Case, the traffic between the FSA and law firms has tended to move in one direction. Examples of senior enforcement lawyers who have taken up posts at City firms include Ian Mason, now at Barlow Lyde & Gilbert, and Carlos Conceicao, who recently joined Clifford Chance.

However, the prospect of Whittaker's lawyers in the general counsel division jumping ship to snap up lucrative City contracts does not appear to keep him awake at night. He points out that the FSA offers quality, interesting work and is the place to gain experience of financial services regulation.

And, given the level of disenchantment among City lawyers with their firms' working cultures, the FSA is well placed to provide a working environment that is stimulating but not all-consuming.

"The nature of the challenges we put on people are quite different here," says Whittaker. "We do not have the intensive long-hours culture that you may have in law firms, so we get people coming here because they have made a lifestyle choice – that they want to see their family from time to time."

Not that being a lawyer at the FSA is an easy ride. A number of Whittaker's lawyers are currently working evenings and weekends on the implementation of European legislation, most significantly the Markets in Financial Instruments Directive.

But he adds: "That is not something that is part of this culture – it is something we do when there is a need."

City firms are also known to be keen to send their lawyers on secondment to the FSA, a situation that Whittaker thinks benefits the regulator as much as the firms.

"From our perspective, it is a great benefit for us as well, because we can take on people for relatively short-term projects and then shrink again. It also gives us an infusion of new ideas, and when people go back it gives us links into law firms."

Whittaker also thinks that under-taking a secondment at the FSA makes lawyers less suspicious of the organisation, which he admits can seem forbidding from the outside.

"People feel more comfortable with the idea of the organisation if they have worked here. People here are looking for the right solution – they are not here to make life difficult unnecessarily."

Last year the FSA set up its own legal training programme, having trained previously-acquired lawyers through its graduate training programme.

One of the issues that has attracted the criticism of some City partners is the FSA's principles-based approach to regulation. One financial services partner argues: "Principles-based regulation is not as good as the marketplace thinks because it introduces a lot of subjective elements."

Such criticism was levelled at the regulator when it fined Citigroup £13.9m for a controversial bond trade; not for breaking any specific rules – such as committing market abuse – but for breaching broader principles, namely not giving due and proper consideration for the 'efficient and orderly' operation of the markets.

Whittaker points out that a substantial body of rules still exists, but that the principles-based approach means giving regulated firms the freedom to do things in different ways. "We want that to involve judgement on the firms' part and judgement on our own part, but it is not designed to trip people up," he says.

The FSA has issued guidance that it hopes will make firms able to predict whether an action is in line with FSA principles. Some have expressed fears that regulated firms might incur the regulator's ire for action carried out before the guidance was issued – in other words, retrospective enforcement.

"Where something only becomes predictable because we have issued guidance, we see the guidance as relevant to conduct that takes place after it was issued," argues Whittaker. "So no-one is going to be challenged for not complying when the rule book's meaning was not clear until the guidance was issued."

Nevertheless, there has been a flood of legislation coming out of the European Union, with the Financial Services Action Plan resulting in a raft of directives that have made many in the City nervous about regulatory creep.

Whittaker admits there has been a voluminous amount of legislation emanating from Europe, but is optimistic about the future, noting that the FSA is near to completing the implementation of the Financial Services Action Plan.

"With the exception of a few remaining areas, based on the Commission's 2005 White Paper, the flood of European legislation for financial services will trickle down to a stream," he predicts.