The Financial Services Authority has lost the second of its two managing directors in three weeks, as it prepares for its imminent break-up into two separate bodies.
Jon Pain, the head of supervision at the City regulator, announced to staff today that he plans to quit his director role on the FSA board early next year.
He will carry on as managing director of Supervision until the switch over to the new structure which should be in place by January 2011.
Hector Sants, the FSA chief executive said Mr Pain had decided that “there will not be a suitable role” for him under the new structure.
“I fully understand his decision to look for a new challenge once the reorganisation is complete and wish him all the best for the future both professionally and personally,” Mr Sants said.
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Mr Pain’s resignation comes in the wake of that of Sally Dewar, the head of risk at the FSA, who announced on June 11 that she also planned to leave the FSA in early 2011.
As of next year, Mr Pain’s supervisory remit will cease to exist as the watchdog prepares to divide into a prudential regulator and a consumer protection agency from 2012, following the Chancellor’s decision to abolish the FSA and hand its powers to the Bank of England.
David Berman, a financial regulatory partner at Macfarlanes, the City law firm, said that the loss of a second official came at a bad time for the FSA and George Osborne.
“The departure of Jon Pain is a big blow for the regulator at a time when continuity is key,” he said.
“If other senior FSA personnel follow suit, the Chancellor will be left with a real problem on his hands.”
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Mr Pain joined the FSA in September 2008 as the managing director of its retail markets division, moving to become director of supervision last October.
He was previously the managing director of Cheltenham & Gloucester, the mortgage arm of Lloyds TSB, and chairman of the Council of Mortgage Lenders from 2006-2007.
In his first Mansion House address Mr Osborne had criticised the FSA for having become “a narrow regulator, almost entirely focused on rules-based regulation”.
He held it responsible for a string of failures, including missing the weakness in Northern Rock and failing to spot the crisis brewing in the country’s banking system.
He also announced that Mr Sants, had reversed his previous decision to leave, saying that he would stay on as the head of the prudential regulator with Andrew Bailey, a senior official at the Bank, as his deputy.
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The head of the new consumer protection authority has not yet been named.