Speaking at an FSA event in London on the future shape of financial services, Sants batted away calls from the Financial Services Practitioner Panel (FSPP) for rewards for ‘good’ firms alongside punishment for the ‘bad’.
Iain Cornish, chair of the FSPP, told delegates: “As much as there needs to be punishment of the wicked under the FCA there must be recognition of the good.”
He added unless a “more collaborative and less adversarial approach” was adopted by the FCA future regulation would represent “some kind of failure”.
But at a press conference after the event Sants ruled out special treatment for well-run firms.
“I don’t think we should go to the stage where lighter regulation for good behaviour is some kind of reward,” he told journalists.
Firms’ incentive to comply with regulation is to avoid further multi-billon pound bills for mis-selling, Sants said.
“The vast majority of the actions a regulator takes should be aligned with good business practices, and therefore bring benefit to shareholders and firms.
“This alignment also includes firms avoiding significant costs due to mis-selling. The cost to the industry of payment protection insurance mis-selling alone is some £20bn at the last count.”
Sants and Margaret Cole, managing director of the FSA’s conduct business unit, also denied the regulator’s current approach was in confrontation with good firms.