By Daniel Hunter
Hector Sants, chief executive (CEO) of the Financial Services Authority (FSA), has announced his intention to leave the organisation at the end of June 2012, having completed the fundamental design and delivery of the changes needed to achieve the Government’s plan to separate prudential and conduct financial regulation in the UK.
During his five years as CEO he has led the radical overhaul of the FSA’s pre-crisis approach to regulation, to a more proactive, intensive and judgment-led approach, for both prudential and conduct supervision. He has been instrumental in driving the reform of the capital and liquidity regimes for banks, championed the need for stronger governance and accountability within the industry and overseen the FSA’s transition to become an effective enforcer.
In February 2010, Hector announced his resignation and was due to step down as CEO of the FSA in the summer of 2010, after three years in the position. However, in June 2010 the new Government announced its plans to change the UK’s financial regulatory framework from an integrated model to a twin peaks model, with prudential and conduct supervision to be carried out by two new organisations - the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
Hector was asked, and agreed, to stay on as CEO in order to deliver the Government’s plans and to help achieve an orderly transition from the current system of regulation to the proposed future model.
In the two years since agreeing to stay on, Hector has created and delivered the new regulatory architecture, whilst continuing to lead the FSA against a backdrop of continued fragility within global financial markets.
The design work to deliver the Government’s proposed changes will culminate in the creation of a new twin peaks structure within the FSA that will come into effect on 2 April. This will mirror the split of future PRA / FCA supervisory responsibilities and help create a smoother transition to the organisations once the legislation currently making its way through parliament is enacted.
“When I agreed to stay on as CEO in 2010, I committed to stay and deliver an orderly transition to the Government’s new regulatory structure. The project is now firmly on track and with the establishment of twin peaks within the FSA I will have achieved that goal," Hector Sants, said.
“Now is the right time to hand over to those who will deliver the long term goals of the future PRA and FCA.
“I am proud of what the FSA has achieved during my time in charge, through what have been incredibly challenging times. I would like to thank all of my colleagues for their dedication, support and hard work. I know I leave the organisation in very capable hands.”
Adair Turner, FSA chairman, said:
“The major reforms made within the FSA since the financial crisis and the progress in delivering the Government’s plan would not have been possible without Hector. He is a truly outstanding public servant of great integrity and has provided the FSA with dedicated leadership and focus through extremely turbulent times.
“I am very sorry to see him leave but I understand his decision, now that he has delivered what he set out to achieve. I’d like to thank him for all that he’s done.
“He can rest assured that he leaves behind a transformed organisation, safe in very capable hands, with a robust blueprint for the future. He goes with my personal thanks and best wishes for the future.”
Hector’s last working day in the office will be the 29th June 2012. Upon his departure, Andrew Bailey will take over Hector’s role as head of the Prudential Business Unit (PBU) the part of the FSA mirroring the future PRA, Martin Wheatley will remain the head of Conduct Business Unit (CBU) and future CEO of the FCA. Following Hector’s departure both will directly report to Lord Turner.
Further details of FSA management structure changes resulting from Hector’s departure will be announced in due course.
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