At the Building Societies Association annual conference in Manchester last week, Centre for the Study of Financial Innovation director Dr Andrew Hilton told delegates that co-operation between the FSA and the BoE needs to be greatly improved in the wake of the credit crunch.
He said one way of improving the relationship would be for the job of FSA chairman to go to a former deputy governor or director of the Bank of England. Callum McCarthy stands down from the position of FSA chairman this autumn.
He said: “No one at the bank or the FSA should ever rise to a senior management position without having spent some time at the other organisation.”
Hilton also suggested having BoE representatives take part in FSA arrow visits and placing FSA representatives in BoE regional offices.
He noted: “It used to be OK in the days when almost everyone in a senior position at the FSA was a BoE alumnus but that is no longer the case. The distance between the two organisations has grown exponentially.”
However, Hilton dismissed calls by the Treasury select committee for a third deputy governor who would have the special split responsibility for systemic issues and relations with the FSA.