Sants flees an uncertain future
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The sudden resignation of Hector Sants last night is more an indicator than a cause of the huge uncertainty hanging over the governance of financial services regulation.
The hastily arranged FSA statement this morning, without any indication of the process for recruiting a successor, shows the dilemmas facing the regulator.
Sants’ well publicised run-ins with the Tories over the future shape of financial regulation could well be the main motive for the decision. Late last year in was reported that the Tories were eyeing up Sants for a senior role at the Bank of England if they win the election, despite their public spat.
Perhaps a better paid more glamorous role in the private sector was more appealing to Sants after six years at the unloved regulator?
Fighting it out for a decent role under the Tories brave new world of regulation, or dealing with the huge headaches which could accompany a hung Parliament, may not have sounded too attractive to a an individual who can command a huge salary by returning to the City.
Without knowing the result of the general election it will be very hard for the FSA to put any sort of succession planning in place. Who wants a job that may not exist in a few months? The skill sets needed for his replacement will be very different depending on the future direction of the regulator.
While there have been plenty of comments on our website this morning celebrating the end of Sants’ reign, and indeed the expected demise of the FSA if the Tories are elected, anyone thinking this will signal a lightening of the regulatory burden for IFAs could be in for a shock.
The Tories have signalled that their slightly soviet sounding Consumer Protection Agency will be out to prove itself while a hung Parliament could see the adviser-unfriendly hand of the Treasury aim for greater influence. Also, the uncertain influence of Europe is only going to get stronger. Sants was never the driving force behind the RDR and it is unlikely to be derailed just because of his departure.
It was probably only a matter for time before Sants jumped ship. So, what about his legacy? We can but hope the future governors of financial regulation, whoever they may be, have taken careful note of the many failings of oversight in the retail space in recent years and aim not to repeat them.
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Readers' comments (16)
Anonymous | 9 Feb 2010 2:09 pm
This just about sums up an industry that has been brought to its knees by the regulator, providers,not depth of understanding and lack of network expertise/proactivity. Doubt anyone will miss Sants, however this just throws more confusion into the market at a difficult time.
Why can't those with influence understand the big picture.
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Incompetent Regulators Awards Team | 9 Feb 2010 2:10 pm
IFAs should not be regulated at all. We sell pacakged products manufacturede elswhere, we have to be qualified at a basic level of competence e.g. pass exams which should be enough. Advanced examinations should be voluntary. Clients have cooling off notices and courts to protect them. What we don't need is regulatory ineterference if the Tories want people to start saving in long products.
We had the best funded pension schemes inh the world in 1997, and now we have a decimated private pension sector. The system wasn't 'broke' so it didn't need fixing. Scrap the CPA and RDR and encourage sellers to 'sell' e.g.encourage commissions and buyers to 'buy' e.g. tax credits to be re-allocated to pensions and ISAs.
This will help re-build Labours broken economy.
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Evan Owen | 9 Feb 2010 2:15 pm
If I was Sants (I'm not) and I believed the Tories had plans which would yet again make matters worse (I do too) then I would announce my resignation now, timing is impeccable even if he made it known at outset that his term was for three years only.
The people who are baying for blood wil see nobody else's but their own as time will tell, meeting the requirements of the RDR will not be the end of this death by a thousand cuts.
The name on the building or letterhead won't make much difference to the people employed by the regulator(s), they will still have a well paid job, just take a look at all the other regulators which were 'merged' over the years, same people, same disdain for the baying mob who call themselves advisers.
And they pay no price for being wrong even if they admit as much, in private.
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Anonymous | 9 Feb 2010 2:16 pm
The future is uncertain for the FSA? At least they can work and at worst they will be given redundancy payments, if not transferred to any new agency. Yet the advisors from Park Row are still just hanging around, three months now, being told that they cannot work for an unspecified time for reasons which have nothing to do with them and that they have no control over.
The FSA may have an uncertain future but that’s better than being told you’ve not got one until someone feels like giving you an authorisation.
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Anonymous | 9 Feb 2010 2:22 pm
We have got to get to a position where our regulator does the required job, i.e. looks after consumer interests. This includes ensuring there is a well balanced and diverse industry around to look after the consumer.
At the moment we have a politically motivated entity run by ladder climbing, power hungry egotists where the consumer interests are way down the list of concerns.
The way we are heading at the moment, there is a serious risk that all we will be left with are regional advisers who merely look after the rich, for no other reason than they cannot afford to look after anyone else and National firms ( although the Network model now appears bust) including Banks and Insurers who will flog products and be big enough to pay the compensation for mis sales.
I hardly want to admit this, but there are huge slices of our population that probably received better advice from the man from the pru and the likes than they can access now, if they can access anyone that is.
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Rod Leonard | 9 Feb 2010 2:25 pm
GREAT STUFF, hope the rest of the FSA and FOS depart before they devastate the IFA with RDR and give retail distribution to the Banks to destroy.
When the IFA has been destroyed all the trail fees and renewal commissions will revert to the Companies and their embedded value. SELF INTEREST OR WHAT.
IFA's turn out the lights when you leave the country.
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Kim North | 9 Feb 2010 3:14 pm
I'll put money on that it's the FSA that needs to turn the lights off in their ivory tower - not IFAs. The demand for independent advice will be greater than ever before this year. Will the banks take control of retail distribution at the high end? No, as they need to go back to their knitting and concentrate on savers and borrowers - not pensions and estate planning. Leave financial planning clients to IFAs who are raising proffesional standards and not the banks pushing products over the counter. In short, Sants resigning to take a city position does not affect IFAs.
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Anonymous | 9 Feb 2010 3:41 pm
What good news lets hope its the FSA next!
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Simon Mansell | 9 Feb 2010 4:57 pm
I am unable to shed the slightest tear for a man that headed up a regulatory cancer causing the terminal decline of its victim the financial services industry. He and his main board should be placed on trial for the financial equivalent of war crimes.
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Steven Farra | 9 Feb 2010 6:17 pm
Sants is (was?) just another corporatist. I understand that he was also very New Labour (happy to be corrected).
So there are two things going on here.
One Sants was not going to fit in with new 'regulation', assuming a Tory victory. Of course he could have done a lot of damage to the Tories pre the election by arguing with their proposals. But what does he, Sants, really want? A fat salary? He's probably rich enough. Recognition? Who by? His peer group? He already has that. The Establishment? Well, what would that mean? Some honour perhaps. The Country? The country couldn't give a toss. "Sants who"? is probably the answer you'd get if you asked the man on the Clapham omnibus who he was. No, my bet is that he's been offered something.
Then there's reg-yew-lay-shun. Sants going is irrelevant to the course of regulation. Unless Cameron & Co have an understanding of human action, freedom and markets, and are able to articulate this understanding in a coherent manner, then I am not sanguine as to seeing any change.
This is bad, and not just for us. Regulation - in all industries and sectors (as the Law are about to find out with the Legal Services Bill) - is a completely flawed concept. Regulation is the problem and not the solution. It is a Statist Corporatist wet dream. They think they've found a way to nationalise business (that is wealth creation) without actually owning it. So the battle is not just with the FSA it's with the whole concept of reg-yew-lay-shun.
The freedom and markets argument has been won, in 1989, forever. What we've lost, temporarily I trust, is the implementation.
So, the FSA has to be scrapped in its entirity. I am content that some residual oversight is required on banks as to their capital and reserves and other factors. But at the same time we have to have a government that runs sound money and does not borrow. I am also content that insurers should need to report to, say, a new DTI as regards solvency, but that Auditors should be responsible for judging their continuing soundness. As regards everyone else in the retail advisory space we need no 'regulation' at all. Why? Because we will do it ourselves and it will inflicted upon us by our clients if we slip up.
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