David Prosser's Outlook: Lord Turner lands the FSA hotseat

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So Adair Turner's public backing for the move by UBM to Ireland for tax reasons was not deemed sufficiently damning for the Chancellor to block his appointment as chairman of the Financial Services Authority. Alistair Darling can't have been pleased to hear that Lord Turner of Ecchinswell, until this month a non-executive director at UBM, had supported the media group's move to Dublin, which is part of a wider trend that has embarrassed the Chancellor into setting up an independent committee of worthies to report on the Government's corporate taxation policies. Still, the former CBI director-general seems to have been forgiven his transgression.

There's certainly no faulting Lord Turner's independence of mind. The recommendations of his Pension Commission now underpin the Government's reform of the UK's pensions system, but it's easy to forget the unpleasant spat that followed the publication of his report. The Treasury, then run by one Gordon Brown, was sufficiently annoyed about the implications for public spending in Lord Turner's report to unleash its spin doctors on the Pension Commission, questioning its figures in a series of off-the-record briefings.

Lord Turner's response was trenchant: he stuck to his guns, insisted that the Government could not simply cherry-pick his recommendations and eventually won over the critics.

He will need to be similarly single-minded once he arrives at the FSA in September. Despite the tribute paid yesterday by the Chancellor to the outgoing chairman, Sir Callum McCarthy, this is an organisation in crisis. It has been so badly run in recent times that a team of regulators specialising in insurance was given responsibility for supervising one of the country's biggest mortgage banks.

They failed to conduct anything more than the most cursory of checks on Northern Rock's activities and the FSA was thus taken utterly by surprise by its collapse.

The regulator's chief executive, Hector Sants, cannot be blamed for the Rock affair, having taken the top job just a few weeks before the crisis broke and having previously run a section of the FSA with no responsibility for the bank. Indeed, having commissioned and then published a damning report of the regulator's failures on Rock, Mr Sants deserves some credit.

Still, Lord Turner's first and most crucial task on arrival at the FSA will be to ensure the sort of basic organisational failings that occurred with Rock cannot ever be repeated. Then he can start worrying about the more academic debates over the FSA's approach to regulation – light touches, principle-based and all the rest.

His thoughts on Mr Sants' ideas for adding bankers' pay structures to the issues the regulator might scrutinise will certainly be interesting, given his non-executive directorship of Standard Chartered (presumably now to be relinquished) and his previous work for Merrill Lynch. He might also bring a fresh perspective on the appropriateness of large wage settlements dating back to his chairmanship of the Low Pay Commission. Perhaps those bankers should start worrying.

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