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Sants flees an uncertain future

The sudden resignation of Hector Sants last night is more an indicator than a cause of the huge uncertainty hanging over the governance of financial services regulation.

The hastily arranged FSA statement this morning, without any indication of the process for recruiting a successor, shows the dilemmas facing the regulator.

Sants’ well publicised run-ins with the Tories over the future shape of financial regulation could well be the main motive for the decision. Late last year in was reported that the Tories were eyeing up Sants for a senior role at the Bank of England if they win the election, despite their public spat.

Perhaps a better paid more glamorous role in the private sector was more appealing to Sants after six years at the unloved regulator?

Fighting it out for a decent role under the Tories brave new world of regulation, or dealing with the huge headaches which could accompany a hung Parliament, may not have sounded too attractive to a an individual who can command a huge salary by returning to the City.

Without knowing the result of the general election it will be very hard for the FSA to put any sort of succession planning in place. Who wants a job that may not exist in a few months? The skill sets needed for his replacement will be very different depending on the future direction of the regulator.

While there have been plenty of comments on our website this morning celebrating the end of Sants’ reign, and indeed the expected demise of the FSA if the Tories are elected,  anyone thinking this will signal a lightening of the regulatory burden for IFAs could be in for a shock.

The Tories have signalled that their slightly soviet sounding Consumer Protection Agency will be out to prove itself while a hung Parliament could see the adviser-unfriendly hand of the Treasury aim for greater influence. Also, the uncertain influence of Europe is only going to get stronger. Sants was never the driving force behind the RDR and it is unlikely to be derailed just because of his departure.

It was probably only a matter for time before Sants jumped ship. So, what about his legacy? We can but hope the future governors of financial regulation, whoever they may be, have taken careful note of the many failings of oversight in the retail space in recent years and aim not to repeat them.

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. This just about sums up an industry that has been brought to its knees by the regulator, providers,not depth of understanding and lack of network expertise/proactivity. Doubt anyone will miss Sants, however this just throws more confusion into the market at a difficult time.
    Why can’t those with influence understand the big picture.

  2. Incompetent Regulators Awards Team 9th February 2010 at 2:10 pm

    IFAs should not be regulated at all. We sell pacakged products manufacturede elswhere, we have to be qualified at a basic level of competence e.g. pass exams which should be enough. Advanced examinations should be voluntary. Clients have cooling off notices and courts to protect them. What we don’t need is regulatory ineterference if the Tories want people to start saving in long products.

    We had the best funded pension schemes inh the world in 1997, and now we have a decimated private pension sector. The system wasn’t ‘broke’ so it didn’t need fixing. Scrap the CPA and RDR and encourage sellers to ‘sell’ e.g.encourage commissions and buyers to ‘buy’ e.g. tax credits to be re-allocated to pensions and ISAs.

    This will help re-build Labours broken economy.

  3. If I was Sants (I’m not) and I believed the Tories had plans which would yet again make matters worse (I do too) then I would announce my resignation now, timing is impeccable even if he made it known at outset that his term was for three years only.

    The people who are baying for blood wil see nobody else’s but their own as time will tell, meeting the requirements of the RDR will not be the end of this death by a thousand cuts.

    The name on the building or letterhead won’t make much difference to the people employed by the regulator(s), they will still have a well paid job, just take a look at all the other regulators which were ‘merged’ over the years, same people, same disdain for the baying mob who call themselves advisers.

    And they pay no price for being wrong even if they admit as much, in private.

  4. The future is uncertain for the FSA? At least they can work and at worst they will be given redundancy payments, if not transferred to any new agency. Yet the advisors from Park Row are still just hanging around, three months now, being told that they cannot work for an unspecified time for reasons which have nothing to do with them and that they have no control over.

    The FSA may have an uncertain future but that’s better than being told you’ve not got one until someone feels like giving you an authorisation.

  5. We have got to get to a position where our regulator does the required job, i.e. looks after consumer interests. This includes ensuring there is a well balanced and diverse industry around to look after the consumer.

    At the moment we have a politically motivated entity run by ladder climbing, power hungry egotists where the consumer interests are way down the list of concerns.

    The way we are heading at the moment, there is a serious risk that all we will be left with are regional advisers who merely look after the rich, for no other reason than they cannot afford to look after anyone else and National firms ( although the Network model now appears bust) including Banks and Insurers who will flog products and be big enough to pay the compensation for mis sales.

    I hardly want to admit this, but there are huge slices of our population that probably received better advice from the man from the pru and the likes than they can access now, if they can access anyone that is.

  6. GREAT STUFF, hope the rest of the FSA and FOS depart before they devastate the IFA with RDR and give retail distribution to the Banks to destroy.

    When the IFA has been destroyed all the trail fees and renewal commissions will revert to the Companies and their embedded value. SELF INTEREST OR WHAT.

    IFA’s turn out the lights when you leave the country.

  7. I’ll put money on that it’s the FSA that needs to turn the lights off in their ivory tower – not IFAs. The demand for independent advice will be greater than ever before this year. Will the banks take control of retail distribution at the high end? No, as they need to go back to their knitting and concentrate on savers and borrowers – not pensions and estate planning. Leave financial planning clients to IFAs who are raising proffesional standards and not the banks pushing products over the counter. In short, Sants resigning to take a city position does not affect IFAs.

  8. What good news lets hope its the FSA next!

  9. Is that proffesional or professional?

  10. I am unable to shed the slightest tear for a man that headed up a regulatory cancer causing the terminal decline of its victim the financial services industry. He and his main board should be placed on trial for the financial equivalent of war crimes.

  11. This just about sums up an industry that has been brought to its knees by the regulator, providers,not depth of understanding and lack of network expertise/proactivity. Doubt anyone will miss Sants, however this just throws more confusion into the market at a difficult time.
    Why can’t those with influence understand the big picture.

  12. Sants is (was?) just another corporatist. I understand that he was also very New Labour (happy to be corrected).

    So there are two things going on here.

    One Sants was not going to fit in with new ‘regulation’, assuming a Tory victory. Of course he could have done a lot of damage to the Tories pre the election by arguing with their proposals. But what does he, Sants, really want? A fat salary? He’s probably rich enough. Recognition? Who by? His peer group? He already has that. The Establishment? Well, what would that mean? Some honour perhaps. The Country? The country couldn’t give a toss. “Sants who”? is probably the answer you’d get if you asked the man on the Clapham omnibus who he was. No, my bet is that he’s been offered something.

    Then there’s reg-yew-lay-shun. Sants going is irrelevant to the course of regulation. Unless Cameron & Co have an understanding of human action, freedom and markets, and are able to articulate this understanding in a coherent manner, then I am not sanguine as to seeing any change.

    This is bad, and not just for us. Regulation – in all industries and sectors (as the Law are about to find out with the Legal Services Bill) – is a completely flawed concept. Regulation is the problem and not the solution. It is a Statist Corporatist wet dream. They think they’ve found a way to nationalise business (that is wealth creation) without actually owning it. So the battle is not just with the FSA it’s with the whole concept of reg-yew-lay-shun.

    The freedom and markets argument has been won, in 1989, forever. What we’ve lost, temporarily I trust, is the implementation.

    So, the FSA has to be scrapped in its entirity. I am content that some residual oversight is required on banks as to their capital and reserves and other factors. But at the same time we have to have a government that runs sound money and does not borrow. I am also content that insurers should need to report to, say, a new DTI as regards solvency, but that Auditors should be responsible for judging their continuing soundness. As regards everyone else in the retail advisory space we need no ‘regulation’ at all. Why? Because we will do it ourselves and it will inflicted upon us by our clients if we slip up.

  13. There is great irony in the headline.

    Hector Sants can and so does flee an uncertain future. Advisers cannot flee and their future is far less certain than his.

    How many non-exec directorships will I be offered if I jump ship?

    The RDR is the vessel withwhich the Treasury hopes to rid itself of those irritating advisers who seem to be successful regardless of the crap thrown at them.

    If the RDR also went then our uncertain future would disappear with it.

  14. When a ship sinks, what is the first creature to depart.

  15. Nemo of the Caribbean 10th February 2010 at 2:18 am

    I left UK financial services one year ago. The reason for this was the FSA. It is entirely impossible to look after your clients and be regulated by the FSA. I apologize to my former colleagues (still friends I hope) for stating this fact but it is true. The two are totally irreconcilable. “You cannot be the servant of two masters etc.” The overriding consideration of a UK IFA is to placate the regulator – whenever time is pressing (isn’t it always?) if the choice is between ”complying” with the regulator or looking after the client then the regulator will always win. You cannot be regulated by the FSA and do a good job for your clients: it is totally impossible. One is about doing for clients that which you would do for yourself in the same situation, the other is about wasting your life ticking boxes and making multi-page reports about TCF (the FSA has never and is totally incapable of, treating anyone fairly, least of all the poor clients). It is a sad thing indeed, and the very thing which lead me to quit the UK that a very good high net worth client – smart guy into international PE – told me that he would no longer deal with anyone regulated by the FSA, reason as per above. Hector Sants is largely to blame for everything that has gone wrong with the FSA, Bank Insolvencies, TCF, RDR etc. – one mad scheme after another. This man is an idiot, plain and simple and is not suitable for any office either public or private – there is no-one in financial services either domestic or foreign that is less well qualified to regulate anything – the fact that the conservatives considered him for another regulatory position should be fair warning to anyone that they haven’t got any more clue than Labour: so sell gilts, sell sterling and get the hell out of anything in way connected to the UK. The UK has had it – thanks to imbeciles like Brown, Darling, Turner and Sants. Fortunately for me, I’ll only see it on CNN – for many of you you’ll actually have to live through it. Good luck

  16. I am sending these links to my MP with Comments. It may work, it may not.

    My MP is a Tory and if AIFA can’t get them on our side for the future maybe we can collectively.

    I wonder if Sants (or for that matter anyone at the FSA) really understands what and IFA does and the effort that we put into what we do.

    For my sins I am a supporter of regulation, but by a regulator who understands what they are regulating and cares to regulate with a sensible, consistant and informed approach.

    It appears to me that most senior staff in the FSA use it as a stepping stone to build up their career contacts and then fly by night to a cosier nest! Sants is probably just continuing that tradition.

  17. GREAT STUFF, hope the rest of the FSA and FOS depart before they devastate the IFA with RDR and give retail distribution to the Banks to destroy.

    When the IFA has been destroyed all the trail fees and renewal commissions will revert to the Companies and their embedded value. SELF INTEREST OR WHAT.

    IFA’s turn out the lights when you leave the country.

  18. Nemo, have noticed posts from you before and wholehearted concur.
    My own experience with the FSA, which culminated in my telling them that I wished to de-regulate, is probably similar to yourself.
    Their response, “that they would look at my ‘application’ to see if they would ALLOW me to de-register’, shows their institutional mindset.
    Prior to this I had tried to enter into a dialogue with the regulator over the implementation of TCF, specifically as it related to the six ‘outcomes’ they were going to be looking for. I had trawled through all the notes and examples they gave explaining how these ‘outcomes’ were supposed to work and be ‘delivered’ and conclude they were making me responsible for the future performance of the products I sold together with the service they might, or might not, receive from the ‘product providers’.
    Eventually I received a couple of paragraphs from the manager for TCF implementation that failed to properly address any of my points and suggested that I should in effect put my faith in the FSA and the way in which it would interpret these ‘rules’.
    I explained that I could not do this and that my application to be ‘allowed’ to de-register must go ahead. Suddenly and almost by return they came back to me and said they would ‘allow’ my de-regulation, previously having stated that it would take an unspecified number of months to gain their approval. Obviously they just wanted to be shot of another broker ASAP. Two years on and the FSA seems to have accepted that TCF has, because it was so misguided in it’s approach, totally failed to provide anything either sensible or tangible to the public. Anyone with an inkling of what an IFA or Mortgage Broker does could have told them this, but because the whole FSA is so politicised it cannot see what is right in front of it because it doesn’t want to see.
    Anyway I now deal with clients on an ‘introducer only’ basis, because they and my industry contacts perceive I have sufficient expertise to add value.
    However most of my energy now goes into selling in a totally different market place, ‘Hosted Broadband Telephone Systems’ to SME’s. (Unfortunately wasn’t in your league to be able to relocate to the sunshine)

  19. An IFA who is sick and tired of paying for ‘gardening leave’ for every top bod who leaves the FSA has asked me to pose some questions:

    If Sants’ contract was for three years why does his pay extend beyond that period?

    Gardening leave is what commecial entities describe payment for vacating the premises without working notice in order to protect the business or when the employee is subject of some sort of investigation.

    This IFA expects his regulator to operate in the same way as it expects him to.

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