Further woes for FSA as boss Sants says he's leaving

FURTHER uncertainty was hanging over the Financial Services Authority yesterday after chief executive Hector Sants announced he would quit the regulator this summer.

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No succession plan was unveiled by the FSA for the former investment banker whose tenure saw massive convulsions in the sector including the failure of the Scottish banks and Northern Rock.

The regulator said a successor would be announced "in due course".

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But his departure throws more doubt over the FSA which already faces threats by the Tories to abolish the watchdog and switch its banking supervisory powers back to the Bank of England.

The party cites failures in the tripartite authority – which including the BoE and the Treasury – in dealing with the financial crisis.

Sants said yesterday he was sticking to the three-year timetable he had set when taking the job.

He said those years "have encompassed the most extraordinary circumstances for a financial regulator".

Sants added that the FSA had "candidly examined" the failings in financial regulation that contributed to the crisis, and "has gone on to reform itself into a much stronger and better equipped organisation".

Lord Turner, chairman of the body, said Sants had given "outstanding service and leadership through the turbulent last three years and has played a pivotal role in reforming the FSA into a truly effective organisation".

However, the announcement raised new doubts in the City about the organisation's future and mixed views on Sants' performance.

Ben Kingsley, a partner at leading City law firm Slaughter & May, said "the air of uncertainty hanging over the FSA is presumably a major factor in his decision".

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He continued: "What I think could now be more concerning is the effect this resignation may have on morale and concentration more generally at the regulator.

"The FSA had reportedly been struggling to retain existing talent, and to attract more. This will doubtless not help."

Robin Geffen, managing director at Neptune Investment Management, said: "It's a shame he did not have a longer tenure. The transience at the FSA is not helpful."

David Bennett, chief executive of the Association of Private Client Investment Managers and Stockbrokers, said: "He's done a good job in challenging circumstances.

"There is a lack of regulatory clarity in where we stand, but that would have been so even if he had not announced he was stepping down."

Sants, a highly regarded former investment banker with Credit Suisse, took over the FSA's top job in July 2007, rising from head of the regulator's wholesale and institutional markets arm.

He had outlined a harder-nosed, more intrusive approach to financial regulation in the wake of the global crash.

In a keynote speech in the City last November, Sants said there was still "an absence of the acceptance of collective responsibility" among bankers for what had happened.

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Glenn Collins, head of Advisory Services at the Association of Chartered Certified Accountants, said: "Sants' tenure has seen tough times. But how can the FSA be deemed a success under his leadership when, for its customers and users, it is less transparent and more labyrinthine than ever?"

Maggie Craig, the acting director-general of the Association of British Insurers, said the challenge for Sants's successor "will be to recognise the fundamental difference between insurance and banking and ensure that following the financial crisis regulation is proportionate and effective".

Possible successors to Sants are unlikely to come from outside the regulator, with front-runners tipped as Sally Dewar, the head of the regulator's risk business unit, and Jon Pain, head of supervision.