Sir Howard calls it a day at FSA to take up top academic post

Internal links

Sir Howard calls it a day at FSA to take up top academic post

Split-cap trusts scandal will weigh on the Davies legacy

Outlook

Sir Howard Davies, the founding chairman of the Financial Services Authority, yesterday resigned from his post to become director of the London School of Economics.

The announcement comes only a few weeks after Mervyn King was appointed as the next governor of the Bank of England. Sir Howard, a former deputy governor of the Bank, is known to have been keen to get the top job.

Sir Howard, 51, was due to step down as chairman and chief executive of the FSA at the end of January 2004. He will leave the FSA four months ahead of schedule, in September next year, to coincide with the start of the academic year.

Now all eyes are on Sir Howard's possible successor at the all-encompassing City regulator that celebrated its first anniversary last month. The Treasury is responsible for choosing a replacement and has vowed to do so before October 2003. It is expected to take the opportunity to split the roles of chairman and chief executive, meaning two senior appointments are up for grabs.

Top of the candidate list is John Tiner, currently the managing director at the FSA, who halved his salary to join the regulator from the now doomed accountancy firm, Andersen. He has been groomed as heir apparent to Sir Howard but his role in regulating split-capital investment trusts, through which investors have lost thousands this year, may have tarnished his chances.

Other possible candidates include Ron Sandler, the former head of Lloyd's of London who published a report on the savings market that was very warmly received in Government circles, and Andrew Crockett, the general manager of the Bank for International Settlements – another Bank of England runner-up. Donald Brydon, the chairman of Axa Investment Managers who also heads the Financial Services Practitioner Panel has been tipped, as has Paul Myners, the former chairman of Gartmore Investment Management.

The FSA was created out of nine regulatory bodies that covered deposit-taking, insurance and investment businesses in the UK. Sir Howard was chairman of one of these bodies, the Securities and Investments Board in 1997, when it was renamed the Financial Services Authority. The FSA became the statutory single financial services regulator in November 2001, and Sir Howard had his appointment as chairman extended in March this year to help see the organisation through its early years.

His appointment at the LSE was confirmed last night at a meeting of the school's board. He takes over from the sociology professor Anthony Giddens.

Mr King, a former professor of economics at LSE, yesterday said: "In appointing Howard Davies, LSE has found a new head with broad experience, a sharp mind and a deep intellectual curiosity."

But his tenure has not been without its financial scandals. Sir Howard has faced detailed inquiries over the FSA's conduct in regulating the financially crippled Equitable Life, the bankrupted Independent Insurance, mortgage endowment policies, and split capital investment trusts.