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
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor