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The Financial Services Authority (FSA) today held its Annual Public Meeting at the Queen Elizabeth II Conference Centre in London, providing members of the public and interested parties a forum to discuss the FSA’s Annual Report, which was published on 10 June.
In his address at today’s meeting, Hector Sants discussed the proposed regulatory changes announced by the Chancellor of the Exchequer in his Mansion House speech on 16 June:
"The new structure will create separate organisations to address conduct and prudential risk. We will thus need to ensure that these new organisations carry forward both the philosophy of ‘outcomes based regulation’ but also the necessary mechanism for making the required judgements.
"As I have said in the past, the key issue is ensuring we have the right quality of people, the right culture and the right regulatory philosophy. Achieving these goals will be a challenge, particularly since we are likely to be making these changes against the backdrop of a continued fragile marketplace. However, I am confident we will succeed.
"May I also take the opportunity to stress that we will take forward all our major policy initiatives within the new structure. We will not be deflected from delivering much needed policy reforms such as the Retail Distribution Review (RDR). Furthermore, firms should recognise that our intensive supervisory approach will continue into the new organisational framework.
"My final two thoughts look beyond achieving the change in structure in the UK and focus on what I consider to be the far more difficult challenges. Firstly, we are entering a period of substantial change in the European regulatory environment and it is vitally important that the UK fully engages with these changes. We must recognise that going forward, particularly in respect of supervision, the national entities will increasingly become an arm of European policy and thus, effective engagement with the European agencies is absolutely critical.
"Secondly, no doubt as we move out of this crisis there will be calls for regulators to revert to light touch regulation, and senior management will be less willing to listen to a regulator who could be seen to be ‘second guessing’ management. When this happens it is vitally important that regulators stand their ground and continue to be proactive, but this will require that they are supported by government and society as a whole."
