Bosses that ignore FSA warnings will be replaced
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FSA chief executive Hector Sants says the regulator is prepared to force out firms’ senior management that do not respond to FSA warnings.
Addressing the Mansion House conference on values and trust earlier today, Sants (pictured) argued that the regulator had a role to play in judging firms’ culture and ethics and should be prepared to intervene where necessary.
He said: “A poor culture at a firm often manifests itself in failures of governance or management - and in response to such failings, we have taken, and will continue to take tough action.
“For most firms that action shall be taken through the board. The ‘tone from the top’ remains critical and if a regulator is concerned, its first action should be exhorting the chief executive and the board to take the necessary remedial actions.
“I would hope that in most cases boards would respond to such warnings. If not, regulators may well have to resort to the stick of the authorisation process and if necessary, push for those individuals to be changed, or where necessary, require them to be.”
Sants also used the speech to attack the bonus culture at banks, saying it was the FSA’s responsibility to ensure that pay does not encourage poor risk management.
He argued that the key to restoring faith in the banking sector was for banks to rein in the bonuses they pay to staff.
Sants said: “Remuneration practices, or bonuses, have been a symbol - a lightening rod of society’s lack of trust in bankers - and to address the trust issue, this state of affairs has to be recognised and resolved.
“I believe that unless bankers demonstrate sensitivity and exercise restraint in this area, trust will not be restored.”
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Readers' comments (23)
Anonymous | 4 Oct 2010 3:25 pm
Pot Kettle?
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Julian Stevens | 4 Oct 2010 3:49 pm
Damn ~ you beat me to it Anonymous 1.
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Stephen Pett | 4 Oct 2010 3:50 pm
Bye bye Bankaneers - NOT
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Chris Neil | 4 Oct 2010 3:51 pm
Wish I'd been at the Mansion House as I would have asked his opinion on the bonus culture at the FSA!!
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Michael Fallas | 4 Oct 2010 3:53 pm
shame we can't have the same rules for the FSA then !!
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Sam Jones | 4 Oct 2010 3:56 pm
I agree with anon - before the FSA start spouting off about banks, they need to rein in their own bonus culture, their dining out with bank bosses and other little back-pocket conflicts of interest that they'd rather weren't publicised, not to mention the reward they get for not doing their job properly - namely fines for firms that they haven't bothered supervising properly for 10 years, then suddenly decide to go in and slap on the wrist. A culture of ethics doesn't start with the bank bosses, it has to start with the Regulator. Come on FSA, help us to believe in you again and maybe, just maybe you can restore the faith of the industry, so we can help restore the faith of the consumer.
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Peter | 4 Oct 2010 3:58 pm
I know that the above comment of pot kettle is a bit unhelpful but where was our regulator between 2000 and 2007?
Why is it that our regulator seems to have a fascination in making the life of an IFA as hard as possible when we seem to be still giving banks and major financial organisations an easy ride?
Its okay to Mr Sants to talk tough but the FSA is being disbanded and replaced by the Bank of England as the FSA was found not to be fit for purpose.
What the general public and the industry in general needs is a set of rules that we all understand rather than the scattergun approach that we seem to have at present. I also believe that talk is cheap and maybe it is about time that a top banking chief lost their fit and proper person status and therefore lost their position as an example to the rest of the industry.
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Marty Young | 4 Oct 2010 4:06 pm
Who does he think he is. Going by what he said he should have been the first one to go. He is going to try to force people out for not following the regs. In other words not doing their job properly (or being incompetent). That being the case why are was Hector Sants not forced out over the bank meltdown.
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Anonymous | 4 Oct 2010 4:06 pm
Comforting to know only replaced and not shot at dawn Mein Herr.
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Anonymous | 4 Oct 2010 4:09 pm
My god, what about his own ethics, sending emails to all his staff on election day reminding them that if the conservative party won the election they would disband the FSA. Also, what about the bonus culture of the FSA, big bonuses for ineptness. Now what is the saying "Don't do as I do, but do as I say"
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