Following an internal reorganisation, the units have been replaced by a Prudential Business Unit (PBU) and a Conduct Business Unit (CBU).
Sants will head up the PBU, supported by Andrew Bailey, who joins the FSA as a Bank of England secondee. Margaret Cole will be interim head of the CBU until Martin Wheatley takes up the role on 1 September.
The government is to transfer prudential supervision of banking and insurance to a subsidiary of the Bank of England, the Prudential Regulation Authority, and rename the FSA the Financial Conduct Authority, which will focus on consumer protection and market regulation.
“This restructure begins a gradual process to ensure we are ready to transfer to the new structure,” Sants wrote in a Dear CEO letter today.
“Part of this evolution will see us design and pilot new processes and train staff, and until this is done we will continue with integrated supervision of your firm and existing ways of working, such as our ARROW operating framework.
“As part of the preparation we will be looking at what the changes will mean in practice, such as what supervision will look like in the two successor bodies, how they will interact, and how processes like authorisation will work across two separate organisations.”
The government must produce legislation to allow for the formal transfer of power from the FSA to its successor regulators.
The legislation must go through debate, scrutiny and amendment in the House of Commons and then the House of Lords. The legislation will then receive Royal Assent, when the Bill becomes law, which the FSA expects to happen during 2012.
