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Now the breast-beating and lobbying has ended with the decision to appoint Lord Turner of Ecchinswell as the new chairman of the City regulator, how things go from here is going to be one for the best tea leaf readers in the land.

Lord Turner, formerly Adair Turner, has a reputation as one of our better public servants with an intellectual depth and confidence worthy of the best graduates of the Ecole Nationale d’Administration or the Polytechnique.

In fact, the McKinsey graduate may consider this a demotion and an insult, but none is intended.

Whatever his skills as a public servant and his ability to negotiate the contours of organisational politics, Lord Turner has a battle on his hands in accepting the potentially poisoned chalice of leading the embattled regulator.

First, he will have to steady the Good Ship FSA, given that the majority, or at least a huge number of its 3000-odd crew are in rebellious mood there is still no real danger of a mutiny.

However, this passive resistance can undermine the way the organisation deals with internal issues, departmental cooperation and, as a direct result, the quality of supervision of both the retail and wholesale financial sectors.

On the face of it, this low staff morale and rudderless leadership is really an issue for CEO Hector Sants, but administrative incompetence is contagious and once cooperation is low among the troops the low spiritedness will spread throughout the building like wildfire.

Once this happens, it will undermine the external effectiveness of the FSA and the impact of all its decisions.

But the real battle will be external and the deep-rooted legacy of proven failure to supervise and manage the sub-prime crisis in the short term and its regulation of both the wholesale and retail financial sectors in the medium term.

Although the Northern Rock crisis was due more to a weak board and an over-confident chief executive forcing through a flawed business model, the reality is that the FSA made a number of regulatory mistakes which weakened its position as the leading integrated regulator in the world.

When the roof fell in on the Newcastle-based mortgage bank in August last year, the only people in the industry who were surprised appeared to be senior managers at the FSA. Lord Turner, working with his cerebral, aloof, even cold CEO, Mr Sants, must endeavour not to allow this to happen again.

However, they must resist any attempt at bullying from the Treasury or Number 10, which Sir Callum McCarthy was not inclined to do, as reflected in the proposed retail distribution review.

The long-term consequences of this failure to reject Treasury 'guidance' is a review obsessively focused on commission as a form of remuneration and implicit in which is a belief that the commission route is the road to all evil. Thus, the interim review's ill-advised concentration on sales and advice.

This should not cause sleepless nights. Afterall, Lord Turner was the author of the two-volume Pension Commission report, the best social policy public document since John Maynard Keynes produced his inter-war study which irreversibly changed the social landscape of Britain.

But it goes far and away beyond this. The real challenge for the new chairman and one on which his five-year tour of duty will be judged, will be the dexterity with which he steers this juggernaut of a beast round and re-constructs a policy which engenders public confidence, the support of financial advisers and the full cooperation of the product providers.

If any of our public servants can perform this Herculean task, then Lord Turner can.

But the big picture view is not the only challenge. There are others: such as the FSA's belief that there is not a savings crisis in Britain.

Maybe the regulator is right, but it takes more than a soundbite to reverse public policy for the past decade.

Since May 1997, we have had more than seven changes in pensions policy changes, either substantive pensions Acts or developments in policy embedded in welfare reform or Finance Acts.

All this, along with the creation of the personal accounts delivery authority, suggests that there is consensus in Whitehall and Westminster that there is a pension timebomb, and that we need to put policy in place now to meet that coming crisis.

If the regulator is of the view that this is over-played, then we want to know the empirical basis on which this radical view is based. And who better than Lord Turner to excavate this lazy thinking from the corridors of Canary Wharf?

There is more where this came from. A few weeks ago the Bank for International Settlements, the bank for central banks, produced a report on suitability and the sale of retail financial products.

It is as important a report as any, given the source and the importance of the RDR on the UK landscape, just as its reports on bank liquidity were equally timely in the lead-up to the sub-prime crisis.

Yet, there is no mention of this at the many RDR seminars, briefings and conferences up and down the land.

If the regulator really wants to consult on important policy issues then we will expect it to listen and all the evidence suggests that it is open to new ideas on the RDR.

Sir Callum has served his purpose by opening the RDR debate, what Lord Turner must not do is accept the institutional bias and assumptions without re-visiting the underlying ideas.

Understandably, after the humiliation of depolarisation, which the FSA inherited from the Office of Fair Trading, the RDR may prove to be the multi-headed beast, but it is not insurmountable.

He must re-open the debate with the understanding that we are looking for a solution that is fit for purpose, not only for contemporary Britain, but one that will last until at least 2025. The current proposals will not fit in a Britain of five years hence.

And another thing, Lord Turner must remove the collective ear muffs from the high command of Canary Wharf and look critically at government policy, even if Gordon Brown and Alistair Darling react in a similar way to Tony Blair a couple years ago. Being shouted at by political masters is par for the course for senior public servants, but such abrasiveness does not make them right.

And where better to start than with the ticking time-bomb that is the personal account, and the obnoxious policy of means-testing as an instrument to the accessing of benefits.

Lord Turner has a lot on his plate. Let's hope he has the appetite and wish him good health.