CRITICISM continued to mount yesterday over plans by the Financial Services Authority (FSA) to vet senior appointments in the Square Mile, with one law firm calling it “a considerable expansion of its powers”.
Reynolds Porter Chamberlain (RPC) said the FSA made the proposals without any consultation.
A letter to 5,000 institutions, sent out earlier this week, outlined how the FSA wants to review not just the preferred candidate for a particular senior job – but the entire shortlist of candidates.
“There is an overarching question at stake of who should be managing financial services companies,” Jonathan Davies, partner of RPC said.
“The deeper the involvement of the FSA in the recruitment process, the more they risk moving from just regulating the sector to actually controlling its development – from weeding out bad apples to choosing favourites,” he added.
The British Bankers Association (BBA)and the CBIhave also expressed concern about the announcements, saying the FSA’s announcement needs “further clarification”.
The letter from the FSA is the latest move by the regulator in its battle to improve corporate governance at banks and other institutions, where management failures have been blamed by some for the crisis.