Sants initially wanted to step down from his position as CEO of the City watchdog in 2010, but was asked by Chancellor George Osborne to see through the transition from the current system to the future twin peak structure.
Now that job will fall to his successors, Andrew Bailey and Martin Wheatley, who joined the FSA in April and September 2011 respectively.
The coalition’s current timeframe for officially splitting the FSA into the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) is March 2013.
Assuming the legislative process goes as planned, that will mean the FSA will cease to exist and the FCA and PRA will have distinct but complementary roles to fulfil.
Within the FSA there have already been two separate units set up which are designed to mirror the future structure: the Prudential Business Unit (PBU) and the Conduct Business Unit (CBU).
Bailey is to take over Sants role as head of the PBU, which mirrors the future PRA, and Wheatley will remain as head of the CBU and future CEO of the FCA.
‘Career regulators’
So what of these two men, their background and respective merits?
On the face of it, both seem very well qualified for positions of responsibility within the City regulator.
Bailey was employed at the Bank of England for 25 years and was most latterly chief cashier before he joined the FSA on secondment to be Sants deputy in the PBU.
Wheatley was recruited as managing director of the CBU with the intention for him to become the CEO of the FCA when it is finally formed.
Previously he was CEO of the Hong Kong Securities and Futures Commission, where he served for five years, and before that deputy chief executive of the London Stock Exchange Group.
Both Bailey and Wheatley have impressive records as public servants then. But is this necessarily who we want at the head of the regulator, particularly a newly revamped and supposedly hard-hitting regulator.
Fresh approach needed
David Cowell, director of Myddleton Croft does not think so: "In the public sector and in public bodies, in all the positions of authority, all you ever get is a self-perpetuating oligarchy. We need fresh people and fresh angles. More common sense is needed because ‘professional regulators’ are never to blame for anything."
In this respect, if nothing else, Sants’ position as a former Credit Suisse banker sets him apart.
For a truly useful regulatory system Cowell says the UK should get rid of any regulatory boards – the FSA, FCA, PRA, or any other three-letter abbreviation you can think of – and return to self-regulation.
He is not the only person with this opinion, countless others I have spoken to recently have harked back to the good old days before the FSA existed.
Those outside the financial services would argue this is a case of self-interested nostalgia talking, but there is something to be said for regulators who have actually worked and breathed the industry they oversee.
Alternatives
As Cowell rightly points out if there is a compensation pot in place and all industry practitioners have indemnity insurance there should be no reason for thousands of people in Canary Wharf (where the FSA is based) "making people’s lives difficult for the sake of it".
"I struggle to think of a single case where the FSA has stopped somebody being robbed, it is all reactionary, so what is the point," he says incredulously.
"Self-regulation in matters that are subjective, rather than objective will always produce a better result. If you are judged by your peers then you will accept it."
Would the financial services industry be better off if it returned to a system of self-regulation as it was when the London Stock Exchange and Bank of England in charge? Or do you think there is an even better way? Let us know below.
