Sants was no saint when it came to the regulatory failings at the FSA, but perhaps he wasn’t the sinner that some have made him out to be. My latest column for Financial News.
Few regulators had such a baptism of fire as Hector Sants, whose first task as chief executive of the Financial Services Authority was dealing with the collapse of Northern Rock just a few months after he took over the top job in the summer of 2007 from his predecessor John Tiner.
And few people working in financial markets regulation combine the deep industry experience, fierce intellect, modesty and sense of public service that Sants has brought to the role from which he has resigned – for the second time – today.
While it has become increasingly clear over the past few years that the FSA was – in its own words – ‘not fit for purpose’ in the run-up to the financial crisis, particularly over the collapse of RBS, it is perhaps too easy to single out Sants and conflate him with the obvious regulatory failures of the FSA on his watch and before.
His chairman Lord Turner once described the financial crisis as marking the “intellectual and philosophical failure of market deregulation”. Sants, like many of his peers in the regulatory world (as well as politicians, commentators and those he regulated) was in retrospect as guilty as anyone of this charge. But unlike many others, he has attempted over the past few years to put this right, and was persuaded to stay on at the FSA by the government in 2010 as it prepared itself for a new regulatory structure and regime.
When he joined the FSA as head of its wholesale markets division in 2004 from a seemingly plum job running Credit Suisse’s European business, few who knew him were surprised at the switch. In his late forties at the time, Sants could have cashed in by climbing the corporate ladder in investment banking or building a lucrative portfolio of advisory roles and non-executive directorships, but instead he took a huge pay cut to join the FSA. “As a Christian, I feel strongly that in the latter part of one’s career, it is important to give back to the community,” he said at the time.
In a prophetic comment, he added that one of the challenges of moving from investment banking to regulation was how to attract, motivate and retain the best staff “without just writing them a bigger cheque at the end of the year”. He called for more senior bankers to make the switch into regulation, and for closer cooperation between the poachers and gamekeepers in the financial markets has been a recurring theme of his tenure at the FSA, although it has met with mixed success….
See some alternatives views to this alternative view from the Daily Telegraph or from Ian Fraser