Large fund management houses are forgetting the lessons of the recent downturn and paying over the odds for staff, according to Hendrik du Toit, chief executive of Investec Asset Management.

"I still believe the world isn't a nice place. Industry margins remain under pressure. We need to be very tough in managing the business and take care not to fall back to the bad old ways. My sense is that some people have fallen back. It's some of the big players who don't deserve to be in the game that are causing all the trouble. Bonuses are up and headhunters are demanding big guarantees for their clients," he said.