REGULATORS must have harsher powers to punish and “frighten” executives of failed firms, FSA chief Hector Sants said yesterday in one of his last speeches in the job.
“I believe it is vital that penalties are raised above the current level so that momentum in this area is maintained,” he said, although did not give details of what kind of penalties should be available.
But he said that his time as head of the FSA had taught him that the regulator must not act in “partnership” with firms but “in constructive tension”. “People should be very frightened of the FSA,” he said.
He also warned that the Financial Conduct Authority (FCA), which will take over a chunk of the FSA’s duties next year, could “apply a more rigorous process” to giving executives authorisation to take up key roles, which would lead to more applicants being rejected.
And he said that since the crisis: “I personally feel that insufficient progress has been made on the key issue of effective corporate governance.”