Sants urges firms to work with regulators

In a speech to the British Bankers’ Association, Hector Sants, soon to be head of the Prudential Regulation Authority, said firms must show a greater willingness to work with supervisors and recognise that the incoming regime would have more expertise so it would cost more.

Announcing a move to the ‘twin-peaks model’ as part of the Financial Services Bill, Mr Sants said: “We are not asking firms to forego their right to challenge their supervisor if their decisions have not been properly made.

“But we are suggesting that dragging their feet in complying with requests when it is obvious to all that the outcome is in the best interest of society as a whole is not a behaviour that should survive in the new world.

“It is really important we must use this opportunity to accelerate the behavioural and cultural change needed in both regulators and firms. The new world of judgement-based regulation needs to be embraced by us all.”

As part of the dismantling of the FSA and move to the PRA and Financial Conduct Authority, Mr Sants said from April, banks, building societies, insurers and major investment firms would have two groups of supervisors. One will focus on prudential and one focusing on conduct. All other firms will be solely supervised by the conduct supervisors.

Keith Thomson, director of Investment Services for Dundee-based Blackadders, said: “It is important for all parties to put their point of view forward. Stifling debate is always a retrograde step. However it would be helpful from both a regulatory and practical point of view if the FSA were clearer on what it expected from firms.”