The regulator has also announced that David Kenmir, who has been acting as managing director of retail markets since April, will leave the FSA at the end of the year to pursue other career opportunities. He returns to his role as chief operating officer until his departure.
The FSA says a search to identify a successor to Kenmir will commence shortly.
Pain will take on overall responsibility for regulating firms or groups whose business is predominantly with retail consumers.
This includes the regulation of high street banks, building societies, insurance companies, mortgage lenders, retail financial services intermediaries and approximately 17,000 smaller firms engaged in the mortgage advice, insurance broking and investment advice sectors.
He will also have responsibility for consumer-facing functions such as the financial capability programme and the FSA Consumer Contact Centre.
Pain will also join the FSA board, to be announced by HM Treasury today.
Prior to his role at Cheltenham & Gloucester, which he left in October, Pain held various positions within the Lloyds TSB Group since 1973.
He was chairman of the Council of Mortgage Lenders in 2006 and 2007 and was a member of the executive committee and chairman of the household committee at the Association of British Insurers between 2001 and 2003.
The FSA has also announced that Clive Adamson has been appointed as director of the major retail groups division.
The MRGD’s remit is the close and continuous supervision of the retail high-impact groups, involvement in FSA sector work, themes and industry sector projects and a supervisory relationship with overseas regulators in the key G10 countries.
FSA chief executive Hector Sants says: “I am delighted that Jon Pain will be joining the FSA and believe he will be a valuable addition to our management team. With more than three decades experience working in retail banking, insurance and the mortgage sector, as well as his work with trade bodies, Jon will play a key role in driving the FSA’s regulatory and consumer-facing objectives for the retail markets sector.
“I am pleased to confirm Clive’s permanent appointment to this role which, along with that of Jon Pain, further reinforces our strategy of ensuring the FSA is staffed by people with the right mix of regulatory and market experience.”