FSA chief executive Hector Sants’ decision to quit the regulator will see him join the steady stream of senior staff to leave in recent times.
Sants, who was an investment banker and previously FSA managing director of wholesale, endured a rocky relationship with the IFA community who saw him leading a regulator all too ready to crack down on the independent sector, yet more reluctant to tackle the advice abuses on display at the big banks.
This was typified by the FSA’s refusal to personally punish senior bank staff for the various advice failings exposed in recent years, in contrast to the treatment of senior management at IFA firms such as Park Row.
In response to accusations the FSA had engaged in light-touch regulation in the lead-up to the financial crisis, Sants crafted his notorious “be very afraid” speech in 2009.
This was followed by a number of welcome personal attacks on bank advice which it was hoped would herald a significant clampdown on the sector. But there remain concerns a high-pressured, anti-consumer sales culture will continue well after the RDR increases the standards required of professional advisers.
Another symbolic episode in Sants’ tenure was the decision to reject the Treasury select committee’s call for a delay to the RDR in a press release timed to accompany the TSC’s report. The move angered MPs and painted an all too familiar picture of a regulator willing to formally consult but unwilling to listen.
Regulatory costs, which are ultimately paid for by clients, have soared and there has been no sense that the age of austerity being felt within Government departments and across the nation has had an impact on FSA spending. In particular, the lack of urgency over the current broken model of Financial Services Compensation Scheme funding has been far from impressive.
In shaping retail policy, there has been an overriding failure to recognise the social dangers of consumers not engaging in financial services, for example, on protection and regular saving, alongside the need to stop bad behaviour.
New Financial Conduct Authority head Martin Wheatley has not been shy in stamping his style on retail policy in a number of recent speeches. He would do well to remember part of his role of protecting consumers should be to ensure a healthy, professional advice sector is allowed to flourish.