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Sants’ final speech: Tougher action needed on senior management

Outgoing FSA chief executive Hector Sants has called for there to be greater individual accountability in the event of firm failure and wants to see senior management subject to tougher penalties.

Sants (pictured) used his last speech as FSA chief executive to set out firms’ responsibilities in having effective boards, hiring the right people for senior positions, and the regulator’s role in supervising boards and senior management. Sants also said he would like to encourage firms to place more emphasis on treating customers fairly when assessing an individual’s pay.

Speaking today at Merchant Taylors’ Hall in London, Sants said he felt “insufficient progress” has been made on effective corporate governance.

Over the last two years the FSA has introduced its significant influence function process to assess the suitability of candidates in roles such as chairperson, senior non-executive directors, chief executives and risk and finance directors.

Sants said during this time the FSA has determined 653 applications, following at least one SIF interview. Of these 48 were withdrawn, 39 of which were due to serious concerns identified by the FSA interview panel.

He said boards have in the past focused on boosting revenue and assets rather than asset quality.

Sants said: “In addition to incentivising the right behaviour there is also the question of the regulator’s role in deterrence. Following the Royal Bank of Scotland report the Government and the FSA are committed to a discussion paper on the governance of individual accountability for decision making.”

He argued that if someone is on the board of a bank that fails they should not be allowed to carry out that role in future.

He said: “It is important regulators operate a credible enforcement regime for individual wrongdoing, particularly in the conduct area. In this area much progress has been made to ensure the regulatory regime is seen as providing effective deterrence. However I believe it is vital penalties are raised above the current level so that momentum in this area is maintained.”

Sants noted the three major themes in many of his speeches were that people should be very frightened of the FSA, that most people in the financial services industry were decent and honest, and that good regulatory judgements should be aligned with good business judgements.

He said: “Supervision is not a negotiation with firms. Supervisors should make their own judgements and act on them.

“When I first joined the FSA I expressed this relationship in terms of working together in ‘partnership’ but I have now concluded that word does not best describe the nature of the relationship between the regulator and the regulated. Regulators and firms should neither be in a relationship of partnership or conflict but in constructive tension.”

Sants added: “Ultimately the purpose of financial markets is to serve everyone not the personal interests of individuals.”


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There are 28 comments at the moment, we would love to hear your opinion too.

  1. Nicholas Pleasure 24th April 2012 at 12:25 pm

    We’ll accept even tougher accountability when the regulators are exposed to the same accountability.

    Good riddance Hector. You will not be missed.

  2. Reap what you sow !!!

    If all were to adopt your statements you will never work again !!!

  3. Senior management failure subject to tougher individual penalties?

    Wonder if he practised the speech in front of a mirror?

  4. So, let’s start with the senior management of the regulator, which to all intents and purposes has presided over the highest and worst number of regulatory failures since the FSA came into being. KIS Ltd, Lehman, Arch Cru to name but a few.

    If accountability is the issue, then the FSA / newly formed FCA needs to be accountable for the almighty cock ups they have made and will continue to make in the future due to the inadequacy and incompetence of these nut jobs, who just spend their days and our money, desiging and issuing unworkable regulations, which have little or no relevance to the real world and when the final insult to decent hard working IFAs comes into force post 2012, will demonstrate once and for all that the consumer has never been at the forefront of the regulators thinking.

    Sants is a waste of space, the press should stop giving him a voice, he is bailing out of a sinking ship before it goes down, any decent senior guy would stop in the job and oversee the implementation of the RDR so that we can all see how it fails and who is ultimately responsible.

    Effectively putting the iFA sector into a non transactionaly mode of operation, will only see a decline in savings, investments and protection, which ultimately will see a loss of capital into the markets for business to access and expand.

    Do any of these nut jobs have any qualifications to do their job. There seems to be no exams for regulators of our industry which could demonstrate they actually know what they are doing. Any info would be appreciated.

  5. How about starting at the FSA Sants, and then working your way down to the less incompetent senior managers !!

  6. There was / is one person perfectly placed to combat “insufficient progress” and he failed TOTALLY !

  7. Is this man still talking? Why cant he just get lost and we can get, hopefully a more competent replacement who can actually regulate and not let his personal political views cloud his already poor judgment. someone order him a Taxi!

  8. What a hypocrite!!

  9. Tighter remuneration controls please…But only after I have gone and received my pay-off!

    A speech from a disengaged and teflon-coated individual who suggests that everyone within financial services requires intense regulation, which infers that we are not to be trusted in my book. Talk about tarring everyone, that’s what I have come to expect from lazy journalists, not from the head of our own regulator.

  10. Sants states that firms should take into account TCF when determining executive’s pay! And how much is this village idiot earning, more to the point how much will he receive during his 6 months gardening leave? If gongs were awarded for blatent hypocrisy then Sants would have an MBE, OBE, CBE and knighthood.

  11. Agree with the other comments – he’ll probably get a knighthood like good old Fred.So you want accountability do you? Lets see how many senior FSA staff would hack that – lets make you personally liable if you mess up and if the pointless hugely expensive rules you bring in don’t work..No I didn’t think so.Everybody liable EXCEPT the guys that make the rules.Pathetic.

  12. He`s winding us all up before he goes. Accountability? How can he go on about accountability when he has non. It`s like a refuse collector suggesting alteration to a brain surgeon, barking. Rant Over.

  13. The sheer arrogance. Pot, kettle and black are words that spring to mind

    Can he explain why we see a 30 % loss of personnel from the FSA just months before accountability takes hold

  14. ‘contructive tension’ ….. what does this mean.

    I am already old beyond my years because of the nonsense!

  15. They just lost a case against a senior manager at UBS, but thi speech shows that they don’t care. The FSA is not going to stop untill they get their high profile case to justify all the money they are ripping off City companies. @thebigfish_uk

  16. Hmmmmm. Actually, I think this smells of forthcoming peerage, let alone knighthood!

  17. The history books will record Hector as the most ineffective regulator the country has ever had and will probably ever have, he shuffled paper and created his ivory tower while the banks and large intuitions fleeced customers and savers alike, the ultimate epitaph to 13 years of Labours unaccountable squander of public resources. We are afraid of the FSA for the damage that has been done while Hector was in charge.

  18. “Constructive tension” is something I agree with and it works well with compliance internally within firms too. Sales should test the boundries, compliance should push back where necessary. However, this is totally incompatible with a culture based on being frightened of the FSA. The culture is determined by the FSA and fear does not drive any constructive behaviour – fear and conflict are coterminous.

    In addition, penalties do not drive the right behaviour of ignorant or wilful wrongdoers because it is their nature. Working with good people and providing meaningful and specific guidance would be a good start. In that culture the very same people will provide the intelligence and help the FSA need to drive positive outcomes for clients overall.

  19. Sants is a complete joke! Its hard to take him seriously any more.

    He could have at least included an apology to the UK taxpayer, who have had to bail out RBS, HBOS and NR to the tune of £90 billion, thanks to the failure of the FSA!

  20. A regulator is unlikely to ever be popular with the regulated, however, they can strive for respect. The last couple of decades have seen both institutional and individual examples of this.

    Sadly, Mr Sants and his cronies have, in the main, lost respect due to their breath-taking arrogance and bullying behaviour.

    If it reminds of one important lesson, it is that absolute power corrupts absolutely.

    If I am allow just one wish, it would be the FSA will be one day be held to account for its disgraceful behaviour in respect of Arch cru. Those responsible have sought to get off the hook by blaming others, and abusing their powers. If there is any justice in this world, action will be taken against them personally.

  21. Very simply Hector, if you are not accountable in this life you certainly will be in the next! You talk the biggest load of garbage that I have ever heard, what was it you once uttered??? Be afraid be very afraid? Never in a month of Sundays. You are the one that needs to be afraid of your own conscience if it ever catches up with you!

  22. If he has not been mis-quoted to say we should be ‘ very frightened ‘ of the FSA is extraordinary. Substitute ‘ very respectful ‘ and it might be a sensible comment to make. Unfortunately until the employees of the FSA command that respect those words do not work either.
    To try and frighten us is counter productive to both the Regulator and the Industry and he should know better. Going forward we need someone in charge that actaully understands what each partt of the Industry does.

  23. “Constructive tension” is something I agree with and it works well with compliance internally within firms too. Sales should test the boundries, compliance should push back where necessary. However, this is totally incompatible with a culture based on being frightened of the FSA. The culture is determined by the FSA and fear does not drive any constructive behaviour – fear and conflict are coterminous.

    Tony, if fear and conflict were coterminous Hector would not be standing!

  24. Its quite interesting

    The old saying “good day to bury bad news”

    This has 22 comments and rising however another story FSA costs IFA’s £32 Millloin in over used section 166 and skilled persons reporting. NIL

    I know which one I am more angry about they contine to dish out 166’s like smarties.

  25. With necks made of such solid brass, the likes of Sants and Cummings need never fear reinstatement of the death penalty; they’d never be able to hang ’em!

  26. One tries not to get too emotive when reading comments such as these but really, there is a limit!

    The banking sector cut fast and loose prior to the financial crisis and it doesn’t seem that an awful lot has changed in terms of them towing the line.

    The crisis was 4 years ago and apart from Fred the shred being belatedly offered up as a token sacrifice [I’d happily give up an unearned gong in return for a 10th of his pension] no-one else in a bank, regulator or government has been held accountable for the shocking excess.

    Small firms are pilloried and bullied but for the big boys that did the damage, it’s pretty much business as usual. A scandal!

  27. I’m passed caring what this man thinks. He’s proved to all and sundry he was the wrong man at the helm of the FSA. His cohorts in crime also demonstrate time and again they have no real understanding of the man on the street. He’s serving his time at the FSA and thinks his opinion needs to be heard before he goes. It doesn’t. Goodbye Hector you’ve certainly left your legacy but it’s not one you should be proud of.

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