FSA oversight set to persist

ALL major FSA policy initiatives and its intensive supervisory approach will be adopted within the new regulatory structure, FSA chief executive Hector Sants confirmed yesterday.

Speaking at the watchdog’s annual public meeting, Sants said the FSA would take forward all its major policy initiatives within the new structure, including plans to eliminate commission for most retail financial advice and revamping the mortgage market.

Sants said: “We will not be deflected from delivering much needed policy reforms such as the Retail Distribution Review (RDR).

“Furthermore, firms should recognise that our intensive supervisory approach will continue into the new organisational framework,” he added.

The government announced plans to scrap the FSA last week and merge a substantial portion of its powers into a Bank of England subsidiary within two years.

Sants said: “Achieving these goals will be a challenge, particularly since we are likely to be making these changes against the backdrop of a continued fragile marketplace.”

Under the government’s plans, the Bank will be handed micro and macro regulation powers, while a new consumer and markets organisation, and an economic crime unit will also be set up.

Sants also warned that the UK will have to “fully engage” with the continuing changes to the European regulatory environment.

He said: “We must recognise that going forward, particularly in respect of supervision, the national entities will increasingly become an arm of European policy and thus, effective engagement with the European agencies is absolutely critical.”

Despite these “difficult challenges” Sants said he is confident the two-year transition, which he will preside over, will be successful.