Peter Smith, the Financial Services Authority’s head of investment policy, is the latest high profile departure from the regulator. He will leave in June, along with chief executive Hector Sants, who announced his departure in March - when managing director Margaret Cole left the regulator.
They join Katharine Leaman, manager of the FSA's professional standards policy team, Sally Dewar, managing director of risk and board member, Jon Pain, head of supervision, and Dan Waters, director of conduct risk and asset management sector leader and previously head of retail policy, who all left in 2011.
So what is with the mass exodus from the FSA? Some former regulators have clearly decided to cash in, moving on to much more lucrative opportunities in the private sector. These include Pain who went to KPMG as head of financial services within the risk consulting division; Dewar who left for a managing director role at JPMorgan Chase; Leaman who is now a senior manager at the Royal Bank of Scotland; and Dewar who will join PwC in the autumn as an executive board member.
Other moves are less obviously financially motivated. Waters is now managing director of ICI Global, a trade body set up last year focusing on the global fund industry, and Smith will become director of policy at the Dubai Financial Services Authority. Although who knows, Smith may be getting his own island as part of his remuneration package - perhaps Britain as the man who bought that part of “The World” for £43m, Safi Qurashi, is serving seven years in jail in Dubai after being accused of bouncing cheques?
Sants is the real enigma on the list, as he was lined up to head the incoming Prudential Regulation Authority, then said he was leaving as he had done all he needed to do at the City watchdog. He had planned to leave in 2010 but was persuaded by the Treasury to lead reform of the FSA.
When he announced his resignation (the second time) he said: “When I agreed to stay on as chief executive in 2010, I committed to stay and deliver an orderly transition to the Government’s new regulatory structure. The project is now firmly on track and with the establishment of twin peaks within the FSA I will have achieved that goal. Now is the right time to hand over to those who will deliver the long-term goals of the future PRA and FCA.” But as the reform is expected to be concluded in early 2013, June 2012 would seem to most people to be an odd time to go – especially without another job lined up.
Whatever the reasons for their departures, these were the people who were responsible for developing the new regulatory approach for financial services firms after the crisis and who were masterminds of the Retail Distribution Review, shaping the future regulation of financial advisers. Some people – particularly financial advisers bitter about the massive overhaul they have endured with the RDR – will say good riddance. But without them, the new Prudential Regulation Authority will have an even bigger up-hill climb in getting to grips with the highly complex world it must regulate.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
