Speaking at the FSA’s annual public meeting in London today, Sants, who was due to leave the regulator this summer but will now stay on to oversee the restructure, said that the new regulatory structure comprising of two separate organisations addressing conduct and prudential risk will continue with the FSA’s philosophy of ‘outcomes-based regulation’.
He said it would be a challenge to achieve the right regulatory approach and culture against the backdrop of a fragile marketplace, but he was confident of success.
Sants said: “”I would like to stress 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.”
He added that there were two “far more difficult challenges” facing the UK than achieving a restructure: substantial changes to European regulation and calls for light-touch regulation.
Sants said: “”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.”
He added: “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.”
