Staff exodus weakens FSA influence
The Financial Services Authority admitted yesterday that the departure of senior staff ahead of the watchdog's break-up had damaged its ability to influence new European regulations.
Giving evidence to the Treasury Select Committee, Hector Sants, the chief executive of the FSA, said: "Some of the turnover in our senior staff has undoubtedly affected our representation on some of the key regulatory committees because those are elected roles by the European regulatory community elected on a personal basis and the FSA does not have the automatic right to appoint somebody to those roles.
"The process of breaking up the FSA, with some senior people leaving, has been somewhat disruptive to our representational ability."
The UK authorities have been battling to fend off European financial rules. Lord Turner, the FSA chairman, last month attacked capital rules from Brussels that would prevent the UK from imposing higher requirements.
The European clampdown has coincided with a rising rate of resignations from the watchdog as it heads for break-up next year. The leavers have included a string of high-profile figures, including heavy hitters on global issues.
Thomas Huertas, who headed the international division, announced over the summer that he was quitting for a job at the accountancy firm Ernst & Young. Alexander Justham, director of markets, handed in his resignation in July.
The FSA's bosses also told the committee they wanted greater powers to outlaw incompetent bank bosses from the financial industry.
Margaret Cole, the FSA's director of enforcement, said: "I think we want to be in a world where we can be clearer that people who mismanage institutions will never be able to work in the financial services industry again."
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