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FSA to be scrapped in 2012- Sants to stay

FSA chief executive Hector Sants is to remain at the regulator to oversee its transition into a new prudential authority which will be a subsidiary of the Bank of England.

Sants, who was expected to leave the FSA this Summer, will also become a deputy governor of the Bank of England and the first chief executive of the new prudential authority as the FSA is replaced in 2012.

The fundamental shift in UK financial services regulation, announced last night in Chancellor George Osborne’s Mansion House speech, will also see the creation of a new Consumer Protection and Markets Authority to regulate all authorised firms.

The sweeping changes give huge extra powers to Bank of England governor Mervyn King who will also be responsible for a new Financial Policy Committee which will have the power to address macro issues that threaten financial stability.

King says: “We shall aim to avoid an overly legalistic culture with its associated compliance-driven style of regulation. That is an important reason for the separation of consumer protection and market conduct from prudential regulation. We must reverse the seemingly inexorable trend towards more regulation and more regulators. That did not work in the past and is not the right response now.”

FSA chairman Lord Turner says: “In particular I am delighted that Hector, who has done so much to transform the FSA during the past few years, has agreed to lead the transition to the new structure in 2012, and to become the first chief executive of the prudential authority and a deputy governor of the Bank of England.

“The crisis demonstrated the need for new regulatory approaches and more intense supervision, and the FSA has already implemented major change.  But it also demonstrated the need to bridge the gap between macro-prudential policy and the supervision of individual firms. The Chancellor’s proposals for prudential regulation will enable us to do that, while building on the major changes we have made over the last few years.  The timescale will enable us to manage the transition in a smooth and orderly way. “

Lord Turner says there are a number of important issues still to be resolved, particularly around arrangements for enforcement and markets activities. He says: “We look forward to working closely with the Government in considering the relative merits of different possible arrangements for these.”

Lord Turner told BBC Radio 4 this morning that he would be leaving after 2012, although he has been tipped as a future successor to King.

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Comments

There are 29 comments at the moment, we would love to hear your opinion too.

  1. Great news- no more FSA- but not so good news- Hants to stay on…………

  2. Yes good news indeed – but i suspect with the focus on the banks we will have to wait a bit to see if the RDR is to go the same way, be delayed, or continue as is. I think the later is not really on the cards anymore.- especially given the speech in Nov 2009 by the then Tory Shadow Pensions minister Nigel Waterson where he said:-

    “There is a risk advice will become more expensive rather than more accessible,”

  3. I consider the Financial Services and Marketing Act 2000 to have given the FSA power without accountability and this should be an opportunity for the legislators to have get it right but this time operate within the rules of natural justice and the Human Rights Act. Sants is just a cog in the wheel – he will do what the legislation empowers him to do – it is the legislation that is at fault.

  4. Michael Fallas 17th June 2010 at 9:27 am

    Not convinced that keeping Sants is a good idea but we will soon find out. Would have preferred a clean sweep with some new blood less used to the “old ways”, but I guess you need to have someone who knows the “old ways” for a while.

    Nothing on RDR though or indeed on any other changes so I guess more of the same just a different hat.

    Progress – probably not yet.

  5. So the Mad Hatters tea party carries on.
    All move seats then heads down in the feeding trough lads.

  6. No More Gordon Brown, HIPs gone and now Bye Bye FSA does that mean all my wishes have been used up?

  7. Great news FSA going but how much will it cost IFAs to be registered with new regulator? Will we now see the RDR put in the bin and get sensible regs…I doubt it

  8. Steven Farrall (Adviser Alliance) 17th June 2010 at 9:37 am

    Hants will be a K asap. My bet that that was his ‘price’.

    The new Consumer Protection cobblers will be worse than the FSA as it will think that it still has the universal wisdom as to what’s best for everyone else.

    Better get lobbying now chaps.

  9. Hector Sants will no doubt get a big payday from the FSA and a golden handshake from the Bank of England.Anyone else with his track record of failure would not even be considered for the post.JOBS FOR THE BOYS as always

  10. An opportunity to treat and respect IFAs as true professionals (assuming they have the relevant qualifications, experience and achieved a level of responsibility- like other professionals).

    Were there any IFAS or their representatives at the Manor House last night?

  11. To: Anonymous | 17 Jun 2010 9:34 am

    It has been estimated that it will cost an extra £100 million per annum.

    As the saying goes, be careful what you wish for.

  12. Que sera sera
    Thats good news and bad news. The good news is that everyone will expect things to change….the bad news is of course, and everyone knows it really, nothing will change.

  13. Because of that email he sent out to his employees on election day, he should not be still in the job, let alone saying on to 2012!!! He must be in breach of some kind of employment law!!!

  14. Same people, different name.

    We will still be paying the same fees, the staff and management of the new body will still be in their Ivory Tower somewhere.

    They will still be paid too much, from our fees, and they will still be paid (some of them) inexplicable and unjustified bonuses.

    RDR, or something like it, will happen and commission will be abolished, and none of us should see that as a negative.

    The best that we can hope for is that a smaller body, focussed on consumer protection, might be a bit more sensible and learn from past mistakes.

    By the way (Steven Farrall) how do you give a knighthood to Hampshire?

  15. So under Sant’s control the FSA failed in every area it was set to over see. He seems the obvious choice to head the body.
    Well with his track record who else would employ him??????

  16. Says King: “We must reverse the seemingly inexorable trend towards more regulation and more regulators. That did not work in the past and is not the right response now.”

    Says Turner (regularly): “We need more staff, more money, more power.”

    If King has his way, you ain’t gonna get those things, Lord Turner, and quite right too.

    Cummings going, Hants staying. Not great. Then again, the real culprit for most of the troubles with which the UK economy and the financial services industry are currently afflicted, and who now will never be brought to book, is John Tiner. Think about it ~ the period over which the banks were effectively given free rein was whilst Tiner was in charge and it was Tiner who dumped the RDR on the industry as his parting brickbat prior to jumping ship.

    The new CPA may be okay, provided that alongside it the government creates an Independent Regulatory Standards Committee, so that at last we have an accountable regulator as opposed to an unbridled monster.

    Oh yes, whatever happened to the National Audit Office’s investigation into the FSA? Judging by the FSA’s continued profligacy, nothing much. So no accountability there, then. It all got quietly flushed away as a result of a few strings being pulled behind closed doors.

    But we battle on.

  17. I understand the G’vnor of the B o E is on something like £300k pa. As a Deputy G’vnor Hector must be in line for a massive pay cut. I hope he does not expect golden handshakes all round. After all he should have been sacked for his election day e-mail, let alone for overseeing the debacle of the past few years at the FSA.
    The last few months of the regulator ‘getting tough’ with a few Brokers and IFA’s and collecting fines from a few banks hardly merits continued employment let alone an invitation to stay on.
    Employment at the B o E should be for those with impeccably clean credentials, not someone who has weaseled his way out of responsibility, as chief regulator, for four bank insolvency’s.

  18. The positive view should be that the return of accountability is to be welcomed.

    The FSA failed in its primary duty and is being disbanded.However, quite how Hector Sants has survived and who exactly rates him so highly is a mystery. His performance in front of the Treasury Committee was embarassing yet he is to become a deputy governor of the Bank of England.This should at least keep him away from IFAs so we must be grateful for small mercies. This area of the market is clearly not his strong point.

    I hope many of the rank and file staff members of the FSA survive. I have always found them helpful and relatively amiable people. It is the high earning policy makers and senior executives who need to be replaced.

  19. Lautro, Imro, Fimbra, PIA, FSA

    So whats new, politicians are all the same great intentions but its trial and error and we foot the bill.

    We should pay them and regulators on acheivement and results as happens in the private sector. Wouldnt cost a lot would it and as for new regulators what a waste of tax payers money.

    If Sant were an IFA he would be accused of churnining, but then again he wouldnt do that WOULD HE?

    .

  20. The wheels on the bus go round and round.

  21. Are you still listening Mr Sants you failed at the helm of the FSA and as a reward you have been moved to be deputy dog at the Bank of England to fail there as well. George Osborne on this issue shows he lacks the guts to cut out the culture of unaccountability and failure from a regulator who presided over systemic failure of the financial system. I agree that to maintain financial stability, governence should move back to the Bank Of England but please cut out the deadwood.

  22. The mistakes made by previous regulators such as the Securities and Investments Board, FIMBRA and the Building Societies Commission appear to have long been brushed under the carpet but the consequences of those mistakes remain , especially for the very elderly.

  23. I trust that some twits (sorry my spelling is not so good) at the FSA will now experience some of the stress,sleepless nights and daily worries that I have had to endure over the years due to their Stalin like approach.See how you like it,eh,not nice is it you creeps.I am an honest hard working broker who has not put a foot wrong in over 30 years.I am just about to shell out my inflated fees to you swines. Bitter me,no,good riddance to you buffoons,yes.Start the party.

  24. Another case of rewarding failure – Sants gets promotion for presiding over catastrophe – its merely jobs for the boys
    Simon Mansell is absolutely right – its the legislation we have to concentrate on – the new regulatory body must be accountable.
    I would also suggest that the enforcement arm should be quite separate, and structured to follow the Rule of Law.
    It is important that we start making sensible noises now if we are to influence the legislators.

  25. Unbelieveable, what other industry/profession where the bosses who did such a poor job would entertain the architects of such disasters as bosses of their replacements? He said he was resigning so why not just let him go and then to have him as Mervin King’s successor, nightmare.

    Now I being cynical here again (this is getting to be a habit) isn’t Mr Sants a personal friend of David Cameron, or have I heard it wrong? What is this, same ol’, same ol’? And there was me thinking DC would bring about a change to that type of behaviour!

  26. Will Hector be given a leaving party costing several hundred thousand pounds like his predecessor? The suspense is stifling!!!

  27. I can’t believe that Sants is still there. If the press stories are true about his e-mail on election day, he should have been fired forthwith for gross misconduct inconsistent with his role as a public servant.

    We should all petition the No 10 web site!

  28. wont make any difference whatsoever, the FSA principals and policies will still be carried through its a different badge on the same product.

  29. Will you lot stop whinging – you wanted your cake – now eat it! Stop feeling sorry for yourselves.

    Great for compliance professionals though.

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