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Comment: July 2010 |
New Name - Same Mix?Well, those who saw something
machiavellian in Hector Sants unexpectedly announcing
that he was going to retire after three years as head of
the FSA might, with some justice, claim that they were
right. (See lead article in the March edition of
Competence Digest Notes)
Sweeping reforms to the regulatory system will see
the FSA abolished and the creation of a Consumer
Protection and Markets Authority (CPMA) to regulate all
authorised firms. Hector Sants will oversee the
restructure and become the first chief executive of the
new prudential regulator which will be a subsidiary of
the Bank of England. He will also become a deputy Bank
of England governor.

Our view is that this appointment probably owes more
to the Bank being confident that Sants will tow the
line, rather than them perceiving him as having any
outstanding talents.
Some might question why the Chief Executive for the
last three years of a regulatory body which is widely
considered to have been ‘not fit for purpose’, should be
asked to form a new regulatory body. Well you should
not. We are talking ‘higher echelons of the civil
service’ here, where normal principles of good practise
do not necessarily apply.
The reforms give huge new powers to Mervyn King who
heads the Bank of England, although George Osborne will
have the power to overrule him should he wish. An
unlikely scenario. The FSA Chairman, Lord Turner has
said: “The overall future shape of financial regulation
is now much clearer and we are in a strong position to
create a future regulatory system that builds on the
FSA’s achievements over the last few years of major
change.” As any achievements of the FSA over the last
few years seem to be outweighed by their failures, this
is not a particularly ringing endorsement. We have to
say that we are not optimistic. This looks very much
like a mere shuffling of the pack which will throw up
the same old faces in not much different guises. There
is nothing to indicate that the endemic problems of
arrogance, prejudice, overstaffing, lack of relevant
experience and under-qualification within the regulator
will be addressed.
The above is the lead
article in our monthly CPD Digest. Please
click here for information about the full Digest.
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