The FSA’s principle-based regulation regime is unlikely to work in retail financial services, says former FSA managing director Carol Sergeant.Sergeant, who was John Tiner’s main rival for the job of FSA chief executive and is now Lloyds TSB chief risk director, told the Building Societies’ Association conference in Manchester last week that a prin-ciple-based approach will work in the “two consenting adults” wholesale market. But she warned it would not work when retail consumers have to be taken into account. She said recent FSA statements on treating customers fairly have left the industry unclear of what is expected of them and the retail market requires a minimum set of prescriptive standards to regulate risk in such an environment. Sergeant said: “A principle-based approach is extremely difficult in the retail market though it can work between two consenting adults in the wholesale market. This approach should be translated into minimum standards in the retail markets.” She worked for the FSA from 1998 to 2003, becoming managing director of regulatory process and risks, responsible for authorisation and enforcement, risk framework and strategic planning and research. In a recent speech, FSA chief executive John Tiner reinforced the commitment to a principle-based approach and away from an “unhappy alliance of high-level principles, detailed rules and guidance in the FSA handbook”. Speaking at last week’s Manchester Mortgage Expo, FSA head of mortgages and credit unions Michael Lord said the regulator was aware of TCF concerns and was looking at areas where minimum standards might be appropriate.