The Financial Services Authority is to part company with yet another of its senior managers in the wake of the Northern Rock collapse, it emerged yesterday.
Clive Briault, the sixth and most-senior FSA executive charged with handling the crisis involving the Newcastle-based bank, will leave the watchdog by mutual agreement. As the managing director of the FSA's retail business, he was ultimately responsible for ensuring that checks and balances were in place so that an episode such as the Northern Rock debacle could be detected before it got out of hand.
The announcement of Mr Briault's departure comes days before the publication of an FSA report into the affair. The document, due for release on Wednesday, will reveal the findings of an internal inquiry into why the FSA failed to avert the crisis. Its chief executive, Hector Sants, has already publicly admitted his staff were at fault, but the report is expected to shed further light on specific shortcomings.
Mr Briault will be replaced in an acting capacity by the FSA's former managing director for regulatory services, David Kenmir, who was appointed its chief operating officer just two months ago. However, the FSA said it would conduct a thorough search for a full-time replacement. In a note to FSA workers yesterday, Mr Sants said: "It is with regret I announce that Clive Briault is leaving the FSA by mutual agreement at the end of April. Clive has been an outstanding colleague who has contributed much to the organisation in his time at the FSA and before that with the Bank of England.."
Kathleen Reeves, the watchdog's current human resources director, will take over Mr Kenmir's responsibilities until Mr Briault's replacement is found.
Mr Sants said the FSA also planned to strengthen its retail group supervision and financial stability divisions, and would be allocating new directors – David Strachan and Thomas Huertas – to work in these areas. Clive Adamson will take on the role of director of major retail groups, again in an acting capacity. The management shake-up is the second in just over two months. However, the FSA chairman Callum McCarthy, who has led the board since September 2003, has so far avoided the axe.
Mr Sants was somewhat fortunate in the timing of his arrival at the FSA. He has fought off pressure to resign because he took over only two months before the Rock collapsed. His predecessor, John Tiner, stepped down as chief executive on the day that Ben Bernanke, the head of the US Federal Reserve Bank, warned that the fallout from the credit crunch would be much worse than people expected.
In January, the Commons Treasury Select Committee published a report claiming that the FSA was guilty of a "systematic failure of duty" in its supervision of Northern Rock, claiming that it should have spotted the bank's "risky" business plan before it ran into trouble. The lender's extreme dependence for its funding on the wholesale money markets, rather than on depositors, proved catastrophic when the credit crunch hit last summer, leading to the first run on a British bank for more than a century.
Commenting yesterday on the departure of Mr Briault, the Liberal Democrat Treasury spokesman, Vince Cable, said: "Following the Treasury Select Committee's criticisms of the FSA over Northern Rock, it is unsurprising that we have seen yet another departure. Given the FSA's recent problems, the Government should reconsider whether it really is the best organisation to prevent future banking crises."
Mr Briault is not thought to have another job to go to immediately. The FSA refused to say whether he would receive a pay-off, saying only that his remuneration would be disclosed in its 2008 annual report this summer. Last year, Mr Briault earned £408,000 including bonuses and other benefits. The FSA report for 2007 says that all executive directors on rolling contracts are entitled to 12-months' notice on termination of the contract by either party.
Mr Briault's departure brings to an end a 10-year career with the regulator, which he joined at its inception in 1998 as director of central policy. He went on to become director of the prudential standards division in 2001 before taking charge of the ret-ail division in 2004.
Trained as an economist, Mr Briault spent 18 years at the Bank of England in a variety of regulatory and monetary policy roles before joining the FSA.Reuse content