With dismemberment looming, the FSA finds its claws – Published on The Economist, July 8, 2010.
NOT so long ago the Financial Services Authority (FSA), London’s erstwhile “light-touch” regulator, was widely regarded as a paper tiger exerting only minimal control over Britain’s largely laissez-faire financial system. Yet faced, after the general election in May produced a new government, with the prospect of being broken up and absorbed into the Bank of England, the tiger appears to have located its claws. What happened?
Hector Sants, the FSA’s chief executive, is clearly enjoying the new dispensation. He regularly exhorts his team to pursue an agenda of more intrusive regulation. His enforcement director, Margaret Cole, has vowed to crack down on what she terms “criminals in suits”.
Both are proving as good as their word. On June 29th the regulator launched a very public investigation into “with-profits” business: pooled and often opaque investment funds that are typically run by insurance companies. Two firms are accused of exposing policyholders to “particularly acute” risks and now face possible punishment by the FSA … //
… Finally there is the matter of gainful employment. Mr Sants startled the City when he announced in February his intention to step down from the FSA this summer. He surprised financial folk again when he allowed the chancellor of the exchequer, George Osborne, to persuade him to stay. Mr Sants cited his sense of “public duty”, not the fact that he earned £742,000 last year, including a performance-related bonus of £108,000. (full text).