Speaking after Hector Sants was knighted, Mark Garnier MP, a Treasury select committee member, said: “There is a question of whether knighthoods should be awarded for jobs such as this. Surely a big salary should be sufficient reward.”
Other TSC members such as Pat McFadden, also criticised the decision, given that the financial crisis, during which Sir Hector presided as FSA chief executive, is still ongoing.
Mr Garnier said it was unfair to lay blame for the whole financial crisis on Sir Hector, but questioned the timing of the knighthood given the anger of advisers over the retail distribution review.
Their comments followed widespread criticism of the inclusion of Sir Hector in the New Year Honours List, given that he presided over a regime that witnessed bank failures, mis-selling of payment protection insurance and the Barclays Libor-fixing scandal.
This has been compounded by the fact that Sir Hector, who left the FSA in June 2012, joined Barclays as head of compliance in December, just months after it was fined £59.5m for Libor fixing.
He has clashed with the TSC on a number of occasions. In 2008, then TSC committee chairman John McFall confronted Sir Hector over the FSA’s failure to act over the mis-selling of payment protection insurance.
During a hearing last January, following the FSA’s publication of a report into the failure of the Royal Bank of Scotland, MPs questioned why Sir Hector took no action over the management of the lender and the fatal RBS ABN Amro takeover, when he was director of institutional markets and later managing director of the FSA.
He admitted at the time that he “should have shouted louder,” but claimed the FSA was poorly structured until he joined the executive team.
Sir Hector was also criticised in July 2011 for immediately dismissing a TSC report into the RDR that called for a year’s delay in the now-implemented regulations.
In a later hearing in November, he apologised, and rejected suggestions from committee member Mr Garnier that it suggested “contempt” for parliament.
Sir Hector’s relationship with those he regulates has also been fraught. In 2009, after criticism that the City watchdog had not been tough enough during the financial crisis, Sir Hector said: “I am determined to correct the view that people are not frightened of the FSA. People should be very frightened of the FSA.”
Mr Sants joined the FSA in 2004 as managing director of wholesale and institutional markets, and was appointed chief executive in 2007.
He succeeded John Tiner, who was awarded a CBE in 2008 but no knighthood. Mr Tiner joined the FSA in 2001 as director of the consumer, investment and insurance directorate and became chief executive in 2003.
During his time he saw a rising bull market, and dealt with issues such as the split-cap investment trust scandal and ‘precipice bonds’ before resigning in 2007, before the financial crisis hit.
He initially resigned from FSA in 2010 but was subsequently persuaded to stay to lead the incoming Prudential Regulation Authority.