City's shock as Sants walks out on the FSA before split

Boss quits 'early' and potentially damages the efforts to set up new financial regulatory regime

In a shock move that could damage the Government's attempt to create a radical financial regulatory regime, the Financial Services Authority's chief executive Hector Sants quit yesterday.

Two years ago, the Chancellor, George Osborne, pleaded with Mr Sants not to leave the City regulator until the new regime set up in the wake of the banking crisis was up and running.

This system is still almost two years away, although Mr Sants had already been appointed as the designated head of the Prudential Regulation Authority which will oversee banks. He will not now take that post.

City experts said Mr Sants' resignation will throw the finance sector into confusion. Jonathan Davies, at the City law firm Reynolds Porter Chamberlain, said: "The timing of Hector Sants' resignation is astonishing given that his remit was to deliver an orderly transition to the Government's new twin peaks regulatory structure. Finishing in June before the twin peaks model is in place really is leaving the job half done."

Others pointed out that Mr Sants had been criticised by MPs over his suitability to run the new PRA.

Michael Fallon, the senior Tory on the Treasury Select Committee, had declared his "deep reservations" about Mr Sants leading the organisation. But reports said Mr Sants had been frustrated by the slow pace of change.

Adair Turner, the FSA's chairman, said: "I am very sorry to see him leave, but I understand his decision now that he has delivered what he set out to achieve."

Mr Sants' departure follows a number of high-profile resignations from government enforcement agencies including John Fingleton at the Office of Fair Trading, Richard Alderman at the Serious Fraud Office and Margaret Cole from the FSA. There will also be a new Governor of the Bank of England in June 2013.

Mr Sants was paid £800,000 in 2011 including a performance-related bonus. A former UBS banker, he could earn considerably more than that if he returns to the private sector.

The FSA will not look to replace him ahead of its division into two new organisations. Martin Wheatley, who is lined up to head the consumer-facing Financial Conduct Authority and Andrew Bailey, who was due to be Mr Sants' deputy at the PRA, will oversee the final months of the regulator reporting directly to Lord Turner.

Mr Sants, who has been at the FSA for eight years, five as chief executive, will leave at the end of June. He said: "I am proud of what the FSA has achieved during my time in charge, through incredibly challenging times."

His replacement at the PRA will be appointed by the Treasury on advice from the Bank of England. Mr Osborne said: "I am very grateful for all the good work Hector has done. He has been an outstanding public servant. He has found a natural moment to seek new challenges after eight years at the FSA and having successfully overseen planning for the transition to the new supervisory structure."

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

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones