Hector Sants, chief executive officer of the UK Financial Services Authority, will step down in the summer of 2010 after three years in the post, according to an FSA statement.
Hector Sants was appointed FSA Chief Executive in July 2007, one month after the collapse of Northern Rock, which an internal audit report in 2008 found the regulator largely culpable for failing to understand the risks undertaken by the lender.
Although suffering this baptism by fire, Sants was initially determined to make regulatory progress through dialogue. In 2008 he said: “We don’t ultimately think that successful regulation comes about through a confrontational style.”
However 2009 saw Sants change tact. In a speech given six months after the collapse of Lehman Brothers, he stated: There is a view that people are not frightened of the FSA. I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA.
Sants has been a strong driver for international banking reform and has publicly criticised the Conservative Party’s plans to disband the FSA.
However media reports hint that the FSA’s leading figure stepped down unexpectedly last night, and despite an increasingly vocal desire to change the industry, Sants recently gave signs that the FSA had not made the most of the crisis.
In November 2009 Sants sounded sceptical that the banking industry has learnt any lessons from the recent economic crisis. There remains, I believe, an absence of the acceptance of collective responsibility for what has happened. I personally remain unconvinced that all senior management have taken on board the need to change and operate in a genuinely different manner, he said. As a recent G7 meeting of financial ministers also failed to make any progress in creating an international regulatory framework, Sants may have decided that the task was insurmountable.
He joined the FSA in May 2004 as managing director, Wholesale and Institutional Markets. Sants had responsibility for all regulated markets, the related infrastructure such as clearing and settlement, the operation of the UK Listing rules and regulation of firms or groups which conduct primarily wholesale or institutional market business between professionals.
Sants joined the FSA from Credit Suisse First Boston where he was chief executive officer of Europe, Middle East and Africa. He joined CSFB in 2000 when the firm merged with Donaldson, Lufkin & Jenrette and was a member of CSFB’s Executive Board. He was a member of the Financial Services Practitioner Panel and was previously a Board member of, among other bodies, the SFA and the London Stock Exchange.
Sants said of his decision to step down: When I was appointed I told the board that I planned to serve as CEO for three years, and I intend to stick to that timetable. Of course, those three years have encompassed the most extraordinary circumstances for a financial regulator, and I am very proud of the manner in which the FSA rose to the challenge of dealing with such unprecedented turbulence across global financial markets. Moreover, I believe the FSA candidly examined the failings in financial regulation that contributed to the onset of the crisis, learned the lessons and has gone on to reform itself into a much stronger and better equipped organisation. The success of any regulatory structure depends on ensuring supervision is carried out by high-quality supervisors with sufficient resources and specialist support.
I believe the FSA has made great strides in ensuring that such individuals are in place in the UK and I am sure that after I leave they will continue to do invaluable work to ensure financial stability and protect the interests of consumers.
Adair Turner, chairman of the FSA, said: Hector has 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. He will leave behind an organisation with strong purpose and a clear strategy. We will be immensely sorry to lose him, but understand his decision to move on in the summer and wish him well in whatever he chooses to do after his departure. In the meantime, we will continue to work together to deliver the FSAs reformed and intensive supervisory approach and drive forward the global regulatory reform agenda.
The Financial Times has hinted that Sally Dewar, the FSAs managing director of risk, will be the most likely successor.