Hector Sants changed his mind about stepping down from the Financial Services Authority because he believed it was his “public duty” to oversee the Government’s regulatory reforms.
Speaking for the first time about his decision to remain as FSA chief executive only weeks before he was due to step down, Mr Sants said that he was persuaded because “the Government asked me to stay on” and because he felt “obliged” to oversee the transition. Mr Sants had announced in February that he would leave in the summer after three years in the job.
George Osborne revealed in his Mansion House speech last week that Mr Sants, a former investment banker who is well regarded in the City, would continue in his job. The development has prompted speculation that Lord Turner, the FSA chairman, would step down in the next year or so, because Mr Sants and Mervyn King, the Governor of the Bank of England, can oversee the break-up of the FSA and division of its duties between the Bank and a new body focusing on consumer protection.
The Government has set a two-year timetable for moving the FSA’s responsibility for prudential oversight into the Bank but will set out some details of the plan in a consultation document before Parliament’s summer recess.
Both Mr Sants and Lord Turner emphasised that the coalition’s plan to scrap the previous Government’s tripartite system — which divided regulation between the Treasury, FSA and Bank — would not derail the FSA’s continuijng work and that for banks and insurers which are regulated by the FSA, the experience would be business as usual.
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The Government’s plan to create the Consumer Protection and Markets Authority will provide an opportunity to look properly at issues affecting the customers and strengthen the law where necessary, Lord Turner said.