Sants stays for transition of FSA powers

Hector Sants is to extend his tenure as the chief executive officer of UK regulator the Financial Services Authority to help ensure a smooth transition of its powers to the Bank of England.
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Hector Sants is to extend his tenure as the chief executive officer of UK regulator the Financial Services Authority (FSA) to help ensure a smooth transition of its powers to the Bank of England.

Previously, Sants had declared his intention to step down during the summer, following a three-year spell at the helm of the UK financial regulator.

Instead, he will now lead the transition to a new regulatory structure for oversight of the UK’s financial sector by 2012 and become the first chief executive of a new prudential authority and a deputy governor of the Bank of England (BoE).

New Conservative chancellor George Osborne announced that the BoE’s governor, Mervyn King, would head a new Financial Policy Committee, designed to monitor and prevent the build up of risks in the UK financial sector. Much of the FSA’s other existing powers would be assumed by the new consumer protection and markets authority, which will be responsible for micro-prudential, day-to-day supervision of banking and will report to the central bank.

FSA chairman Lord Turner said he welcomed the planned changes to financial regulation and Sants’ decision to stay on. “The FSA now has the clarity of direction and timescale as well as the leadership that we need to meet the challenges ahead,” he said. “The crisis demonstrated the need for new regulatory approaches and more intense supervision, and the FSA has already implemented major change.

But it also demonstrated the need to bridge the gap between macro-prudential policy and the supervision of individual firms. The Chancellor’s proposals for prudential regulation will enable us to do that, while building on the major changes we have made over the last few years. The timescale will enable us to manage the transition in a smooth and orderly way.” Turner is expected to continue in his role for at least part of the transition process.

London Stock Exchange Group CEO Xavier Rolet said that the exchange also supports the planned reforms the UK’s financial regulatory structure. “We believe that the Bank of England is the right place for the macro-prudential regulation of the economy, the regulation of banking institutions and the oversight of balance sheet organisations. We support the formation of a dedicated consumer protection and markets authority, which we hope will work to re-build trust between consumers and the financial services industry.”

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