McCarthy to step into FSA role in September

Callum McCarthy became the most powerful man in the City yesterday when the Chancellor, Gordon Brown, confirmed his appointment as chairman of the Financial Services Authority (FSA).

Mr McCarthy will join the FSA board in September on a five-year contract, a month before his office at Ofgem, the energy regulator, is due to end.

"He brings to the FSA an unrivalled combination of experience of the public sector, as a senior practitioner in the financial services industry, and chairman of a highly successful regulator. This will prove invaluable to the FSA as it tackles the regulatory challenges of the future," Mr Brown said.

The Treasury is now beginning its search for a chief executive of the FSA, which has been separated from the combined role Sir Howard Davies has so far occupied, and will soon post an advertisement for the job. A shortlist will be drawn up and the Treasury intends to have a candidate in place before Mr McCarthy joins in September.

Mr McCarthy takes the reins from Sir Howard Davies, who is stepping down to head the London School of Economics. He oversaw the integration of the FSA as a single regulator for policing 10,000 financial firms, from nine constituent bodies.

"Howard Davies achieved a considerable amount in establishing the FSA as a single regulator and clearly Callum McCarthy faces a big challenge now – not least because of the severe pressure on the financial services sector from the capital markets," Philip Scott, a director at Aviva, said.

"One of the key factors in insurance regulation is the huge quantity of change being implemented. The challenge for Mr McCarthy will be to ensure that this change is both effective for the consumer and at an appropriate cost to the consumer."

Mr McCarthy will be required four days a week at the FSA's headquarters in Canary Wharf, east London. The FSA remuneration committee will set Mr McCarthy's salary. Sir Howard earned £315,000 last year as joint chairman and chief executive on a five-day-week contract.

The new chairman has previously held a series of senior positions in Barclays Bank, BZW and Kleinwort Benson as well as a number of civil service posts in the Department of Trade and Industry.