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Sants: Separation of prudential and conduct supervision a “big mistake”

FSA chief executive Hector Sants has rejected any calls to separate prudential and conduct supervision by claiming it would be a “big mistake”.

Speaking to the Association of Corporate Treasurers, Sants said that the evidence of this crisis strongly supports the importance of having an integrated supervisor that can make a judgement call on the overall risk in an institution.

He said: “How could you judge risks in Northern Rock and HBOS without taking a view of product and selling risk as well as funding?

“As I have argued, the area of structure which is really important is macro-prudential. The macro-prudential gap needs to be filled. This can be done by strengthening the role of the Bank of England and closer collaboration between the Tripartite Authorities, although a structure for doing so has yet to be determined.”

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