Allen & Overy (A&O) has launched a new regulatory consulting business to work with its financial institution clients, hiring a managing director from JPMorgan in London to lead the venture.

Sally Dewar, who has been working as a managing director and head of international regulatory affairs at JPMorgan in the City, is to join in September to head the Allen & Overy Strategy Group.

Dewar was previously managing director, risk at legacy UK financial regulator The Financial Services Authority, and the business will be run as a separate limited liability partnership that is not regulated by the Solicitors Regulation Authority (SRA).

She will be a partner in the new LLP, with the firm planning to recruit a team to work alongside her. The new consulting arm, the firm's first non-legal standalone business, will initially focus on financial services clients, providing regulatory business advice around matters such as Brexit. A&O said it would enable the firm to broaden its role in managing clients' regulatory risk.

A&O financial institutions co-head Richard Cranfield told Legal Week: "The main driver for this has been demand from some of our biggest banking clients for non-legal teams to give regulatory advice. We have been looking at how to service this demand for about two years and we wanted to offer something that is closely aligned with our legal practice for banking regulatory work."

He added: "Sally has a fabulous reputation at JP Morgan for giving strategic regulatory advice to banks and will mobilise and create business for this group."

A&O has been diversifying its offering in recent years, launching flexible legal services business Peerpoint in 2013. Peerpoint, which draws on a bank of contract lawyers, has increased the number of lawyers on its books by 50% in the last year, with the firm now looking to launch the service in New York and Frankfurt.

Separately, A&O has confirmed it is raising salaries for US associates to match the rates set by Cravath Swaine & Moore earlier this month, as well as paying out summer bonuses of up to $25,000 (£19,000).

The magic circle firm's rate increase brings it in line with rivals Clifford Chance and Freshfields Bruckhaus Deringer, which both made the move in the US earlier this month.

Linklaters is now the only magic circle player yet to confirm whether it is matching the new New York benchmark set by Cravath.

The increases see the most junior US associates paid $190,000 (£143,000), rising to $350,000 (£263,000) for those in the class of 2009 and above.