The institution that protects government-guaranteed deposits in failed banks is facing questions over its future leadership after multiple setbacks to recruiting a new chair and permanent chief executive, City A.M. can reveal.

Veteran banker Marshall Bailey was due to step down in April after serving two three-year terms as chair of the Financial Services Compensation Scheme (FSCS), but regulators extended his term until the end of September after recruitment for his replacement stalled.

Two people familiar with the matter said Lesley Cowley, who formerly chaired the Driver and Vehicle Licensing Agency (DVLA) for almost a decade, was poised to be announced as Bailey’s successor in February before the Financial Conduct Authority (FCA) chose not to approve the appointment.

It is unclear why the FCA made this decision.

Seven months later and with less than two weeks before Bailey’s term ends, the FSCS is still “searching for the right candidate”, another person with knowledge of the process said.

FSCS appointments are approved by the FCA and Bank of England’s Prudential Regulation Authority (PRA), with the chair and chief executive also requiring Treasury backing.

The FSCS, FCA, PRA and Treasury declined to comment on candidate preferences. “We expect to announce a new chair shortly, before this term ends,” an FSCS spokesperson said. Cowley also declined to comment.

Disagreements between regulators and the government over FSCS appointments are not unprecedented. Last October, the scheme named Martyn Beauchamp as its interim chief executive after reports of conflict between the FCA, PRA and Treasury over the choice.

Beauchamp was appointed after Caroline Rainbird abruptly resigned last June.

The delay in finding a new chair has impacted the search for a permanent CEO, with one person familiar with the hiring process suggesting that finding a new CEO would be one of the chair’s main responsibilities.

When it announced Beauchamp’s appointment, the FSCS said recruitment for the permanent CEO would begin in line with the start of its next chair’s first term, which was expected to be April.

A source close to the search said applications for the permanent CEO role closed last week and the new chair was now expected to be involved later on in the process. They added that the FSCS had no expected date for when it would announce a new CEO given the “early” stage of recruitment.

It is understood that Beauchamp signed on for a 12-month fixed term as interim boss, putting pressure on the FSCS to name a permanent chief before the end of October.

“It does leave the organisation in limbo at a key time, which was not the original plan or intention,” said one of the people familiar with the matter.

After plans to appoint Cowley fell through, the FSCS launched a new recruitment effort for the chair post with headhunters Saxton Bampfylde.

The firm began soliciting applications on its website in April and had planned to draw up a shortlist by June, according to an online job description. Saxton Bampfylde did not respond to a request for comment.