FSA BOSS SANTS TO GO DOWN FIGHTING
HECTOR Sants, boss of the embattled Financial Services Authority, yesterday launched a robust defence of the City’s existing regulatory structure in defiance of Tory proposals, fuelling talk that he is preparing to step down within the next few months.
City sources told City PM Sants will retire from the regulator either before or when his current three-year term ends in July, regardless of the future structure of the organisation. One added: “He has done more than he was expecting to do. Whatever happens, it’s hard to see him going beyond July.”
A former investment banker who lives in Oxfordshire, Sants is also keen to spend more time with his family.
Speaking at the FSA’s annual public meeting yesterday, Sants threw his support behind the current system of “integrated supervision”, where the regulator’s duties towards assessment of bank risk and the protection of banking consumers are conducted under the same roof.
His confrontational strategy was at odds with FSA chairman Lord Turner, who adopted a noticeably more conciliatory approach at the meeting, in a move that suggested a deliberate strategy not to alienate the Conservative Party. “There are pros and cons to different models,” Turner said. “The key challenge is not to decide which model to have, but to make whatever is the chosen model work effectively.”
In stark contrast, Sants said: “There are different types of high-level organisational structures around the world but regardless, the best supervision is always a system of integrated risk assessment, with a high level of interdependence between prudential and conduct risk.”
“A large part of Sants’s speech was aimed at justifying the continued presence of the FSA as the single regulator of financial services in the UK,” said Paul Edmondson, a lawyer at CMS Cameron McKenna. “He gave some good examples of scenarios where a split of prudential and conduct of business regulation between different regulators makes little sense.”
Sants’s comments are at odds with Tory proposals to hand back the supervision of bank risk to the Bank of England, leaving a much-reduced and renamed rump FSA to deal with consumer issues.
The Conservatives yesterday insisted they would not throw away all of Sants’s work on the integrated supervision structure, saying the party aims to “build on the approach the FSA has taken”.
The future of the FSA has become a political football with City minister Lord Myners telling City PM yesterday that he felt the Bank of England was “too academic” an institution and had the wrong culture to take on bank supervision.