It is up to society as a whole to decide what kind of regulator the Financial Conduct Authority will be, according to the Financial Services Authority.
Speaking at the FCA conference today, Hector Sants, chief executive at the FSA, says: “It is not the regulator’s role to determine its own mandate. That is for society as a whole to agree. An independent regulator’s job is then to select the best tools to use.”
He says that if the regulator’s aims are not aligned with society’s expectations then the regulator will be unsustainable and unable to operate.
Sants adds: “As I have said before, this was undoubtedly a problem for the FSA.”
Margaret Cole, interim managing director of the Conduct Business Unit, says: “The failures of the past 10 years mean that change is essential. We have a once in a generation opportunity to shape the new regulatory structure and challenge past orthodoxies. We must not waste it.
“We have time between now and the end of 2012 when the FCA is due to be established to consider what kind of regulator society wants the FCA to be and what this means for its operating model.
“It is critical that the issues are widely debated. For the FCA to be a credible and effective regulator it must have the support and backing of parliament and the public from the outset.”
She adds that what the FCA can and cannot be expected to achieve must be clearly understood.