FSA chief quits

Plans for a radical overhaul of the UK’s financial regulatory system have been dealt a blow by the surprise departure of the boss of the City watchdog.

FSA chief executive Hector Sants had been expected to stay on at the regulator until it is disbanded next year, when he would become head of a new body overseeing the UK’s financial stability and a deputy governor of the Bank of England.

But Sants, who was in charge during the banking crisis and spearheaded vital reforms, said he will quit at the end of June - long before the new system is fully up and running.

The move will trigger a search for a new boss of the Prudential Regulation Authority (PRA), which will take over the FSA’s responsibilities for overseeing the banks.

Under a “twin peaks” structure, the Financial Conduct Authority (FCA) will be formed in tandem to look after markets and consumer protection.

Sants, who has been in the role for five years, had announced he would quit in 2010 but was convinced to stay on to oversee a reform of the regulatory system to prevent another financial crisis.

He said: “When I agreed to stay on in 2010, I committed to stay and deliver an orderly transition to the government’s new regulatory structure.

“The project is now firmly on track and with the establishment of twin peaks within the FSA I will have achieved that goal.

“Now is the right time to hand over to those who will deliver the long-term goals of the future PRA and FCA.”

The bodies that will become the PRA and the FCA are already in place and the twin peaks system will start to come into practice next month.

Sir Mervyn King, governor of the Bank of England, said: “I am sad that Hector Sants has decided to stand down. I am very grateful to him for staying on for longer than he had planned.”