Hector Sants pledged to place a particular emphasis on consumers yesterday as he was promoted to the role of chief executive at the City’s chief regulator, the Financial Services Authority.
Mr Sants, who comes from a City background and is head of the FSA’s wholesale division, had long been regarded as the favourite to succeed John Tiner, who leaves on Thursday.
Callum McCarthy, the FSA chairman, said that there was a strong field of both internal and external candidates: “This was absolutely not a one-horse race.”
Mr Sants beat colleagues regarded as serious contenders including Clive Briault, head of the retail division, and David Kenmir, effectively the chief operating officer.
Mr Sants will be paid the same as Mr Tiner – a base salary of £455,000 plus a performance-related bonus of up to £114,000. Mr Sants, 51, a former investment banker with UBS and then Credit Suisse First Boston, is credited with fostering a more constructive and less adversarial relationship between the regulator and the City.
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However, he is less experienced in retail financial services, hence the tone of his statement yesterday: “I will work with the industry to ensure that market solutions deliver the best outcomes for all stakeholders, with a particular emphasis on consumers.”
Mr McCarthy paid tribute to Mr Sants’s industry experience, intellectual engagement and leadership skills, which made him the best contender.
Mr Sants faces a full in-tray as the FSA grapples with dozens of issues including a new regime to govern commisions paid to financial advisers and the inclusion of travel insurance in the FSA’s remit.
Mr Sants’s emphasis on consumer matters is also likely to fuel speculation that the FSA may seek to take over responsibility for the regulation of high street banking products, which are covered by the Banking Code.
On the wholesale side, the FSA is under pressure to crack down on insider dealing, which it admits appears to precede about a quarter of takeover bids.
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Among regulatory lawyers there is speculation that the FSA may pursue a criminal prosecution if a suitable case comes along, rather than use its civil enforcement powers.
Mr Sants is also expected to lobby ministers for a change in the rules so that the FSA can offer immunity from prosecution to witnesses, giving it a better chance of gaining market abuse scalps.
Mr Sants will have only a few months in the job before the FSA and the Treasury have to address further succession planning. Mr McCarthy leaves in September 2008.
“It’s not a surprise, but it’s a good appointment,” Martyn Hopper, partner with Herbert Smith and a former FSA official, said.
Mr Sants combined depth of FSA experience with good credibility in the City because of his past career in investment banking. The FSA said it would look both internally and beyond for a successor as head of wholesale.
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And for my next trick . . .
–– Next Thursday John Tiner will hand the reins of the City regulator to Hector Sants and should then have a comfortable six months on “gardening leave” while watching the job offers roll in.
The FSA, paid for by a levy on the City, and so not governed by civil servant salary restraints, pays reasonably well, more than £400,000 a year for chief executive’s job, but Mr Tiner can look forward to an even more prosperous future.
He leaves on a high and with a growing reputation. Having joined in the depths of the bear market in 2001 after 25 years with the soon to be defunct Arthur Andersen, he was promoted to succeed Sir Howard Davies two years later. Now, aged 49, there is still said to be one last big job in the former management consultant.
That suggests something more hands on than the expected offers of nonexecutive roles from the City are on the Tiner radar. Naturally, that still leaves the lucrative possibility of a consultancy to private equity looming large.