LONDON (Reuters) - A political battle over the future shape of financial supervision in Britain makes applying lessons from the credit crunch and hiring new regulators harder, the country's top market watchdog said yesterday.

"It would be idiotic to deny that uncertainty is a complicating factor. It is a challenge for us to maintain focus on what really matters," Adair Turner, chairman of the Financial Services Authority, told reporters.

Britain's opposition Conservative Party, which opinion polls say will win the general election due in less than a year, pledged on Monday to abolish the FSA and hand over its powers to the Bank of England to create a powerful super-regulator.

The FSA defended itself, saying it has admitted past failures and change has made it "fit for purpose".

"I don't think any other magical organisation out there can do better," Turner added.

The Conservatives say the FSA failed to spot problems at banks before the credit crunch forced Britain to take stakes in several banks.