12 Mar 2009, David Benyon, Operational Risk & Regulation
LONDON - "People should be very frightened of the FSA," said Financial Services Authority (FSA) chief executive Hector Sants in a confrontational speech today. Sants pledged that the regulator would be far more "intrusive and direct" in its supervision of UK firms from now on.
Sants said the regulator would be far more interventionist and judgemental towards senior management, moving from a regulatory style based on observable facts to regulation based on judgements about the future.
"This more intrusive and direct style of supervision we call the intensive supervisory model. To see the full picture it is important to ally this with our more proactive approach to enforcement - our credible deterrence philosophy," said Sants.
Sants referred to media criticism of the effectiveness of the FSA - specifically mentioning a perceived softness in fraud and financial crime enforcement. The regulator has faced a tough press since its botched supervision of nationalised mortgage lender Northern Rock - for which the FSA subsequently admitted its failings.
"There is a view that people are not frightened of the FSA," said Sants. "I can assure you that this is a view I am determined to correct."