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FSA chief says former Bank of England staff to blame for regulator’s failings

FSA chief executive Hector Sants has defended the FSA’s future role in banking supervision, highlighting that former Bank of England employees led areas where the regulator had operational failings.

Speaking at the NAPF conference in Edinburgh today, Sants responded to recent calls for the FSA to be split or stripped of certain powers by suggesting that integrated supervision is needed.

He said: “You could contemplate the whole of the FSA with the Bank of England but the idea to carve out banking regulation alone makes no sense to me, is not supported by events in the last 18 months and in any case I remind you of the fact that in the area that we had our operational failings almost all those staff were the former Bank of England supervisors – that was the Bank of England former supervisory division.”

Sants said he believed over the last 12 months the FSA’s performance as a supervisor had been “excellent”.

He said: “These banks went into the crisis flawed, there was no possibility as a supervisor of rescuing them once they were in the crisis the question was how you manage the crisis and I think as a supervisor we have done a good job over the last 12 months. I think it was operational and management failings which need and have been addressed.”

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