ADAIR TURNER, one of Labour’s most favoured government advisers, is in pole position to be named as the new chairman of the Financial Services Authority (FSA), the City watchdog.

Lord Turner, the former CBI director-general who clashed with Gordon Brown over pensions policy, is expected to be appointed in the next 10 days.

The move would bring an end to a drawn-out hunt to find a successor to Sir Callum McCarthy, who is due to step down in September.

Although Turner, 52, has been among the frontrunners for some time, concerns have been raised about the amount of time he would have to dedicate to the job, which paid £434,000 last year.

Turner is already the chairman of the government’s committee on climate change — a post that he is thought to be unwilling to sacrifice.

However, it is understood that a compromise is being worked out in Whitehall that would allow Turner to retain that role while also taking on the FSA brief.

Other candidates for the chairman’s job were told by the headhunters that the FSA chairman’s job was a full-time position that was expected to take up four to five days a week.

The pressure to find a suitable candidate has intensified since the collapse of Northern Rock, which led to extensive admissions of failure on the part of the regulator.

The headhunters were also given a brief to find someone with experience of consumer finance to complement the investment-banking experience of Hector Sants, the regulator’s chief executive.

Sir James Crosby, the former chief executive of HBOS and deputy chairman of the FSA, turned down the job some months ago. Others who have been approached include two investment bankers: Bob Wigley, the chairman of Merrill Lynch in Europe, and Jonathan Chevenix-Trench, the former president of Morgan Stanley International.

Turner, who previously headed the government’s low-pay commission, is a management consultant by training.

After reading history at Cambridge he joined the strategic planning unit at BP, then moved to Chase Manhattan Bank. He spent much of his career at McKinsey, the management consultancy, where he worked alongside William Hague, the former leader of the Conservative party, and Archie Norman, the former Asda chairman.

Although nicknamed “Red Adair” for moving the CBI towards Labour in his time at the helm, he is a cross-bench peer in the Lords to which he was elevated by Tony Blair in 2005.

Turner recently attacked the government’s policy on immigration as “economically illiterate”. He has also been part of a think-tank funded by prominent Liberal Democrats.

Turner, who was vice-chairman of Merrill Lynch Europe for six years, may come under pressure to give up his other directorships, which include non-executive roles at Standard Chartered and United Business Media, as well as visiting professorships at Cass Business School and the London School of Economics.

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