New senior positions at the Financial Services Authority

New post at Managing Director level

First, the Treasury has announced that, following a recommendation by the Board of the FSA, there will in future be a third managing director reporting to FSA Chairman Howard Davies. The post, which will be advertised in the near future, will have prime responsibility for consumer relations, insurance and investment regulation. The appointment will be made by the Chancellor.

Speaking at the first Annual Meeting held by the authority, Howard Davies said:

The new post will considerably strengthen the FSAs decision-making and overall management structure. It will bring a stronger focus on retail regulation and consumer education to our Board discussions.

The appointment means some changes in the responsibilities of the two existing managing directors:

• Michael Foot will continue to take charge of deposit takers (banks, building societies and credit unions) and markets (recognised exchanges, clearing houses and listing), together with his overall financial stability responsibilities.

• Phillip Thorpe will continue to take charge of authorisation, enforcement and fighting financial crime. He will also take on responsibility for internal change management.

In addition, Paul Boyle, currently Chief Administrative Officer, is appointed Chief Operating Officer (COO) with responsibility for human resources added to his current oversight of information systems, premises and finance. The COO is not a Board member. He has therefore been appointed by the Board of the FSA.

Details of the way in which this new post affects the FSAs divisional structure will be announced in due course.

Chairman of the Regulatory Decisions Committee

Second, the FSA will soon start the search for the Chairman of its new Regulatory Decisions Committee (RDC).

Once the Financial Services and Markets Act comes into effect next year, that Committee will be at the pinnacle of the FSAs enforcement, authorisation and other key regulatory decision making. It will ensure that FSA decisions which go to the heart of regulated firms and individuals ability to engage in regulated activities are taken by a body with a high degree of independence from FSA staff.

The Chairman will be full-time and likely to be a senior member of the legal profession. The members of the Committee, who will be part-time, will comprise current and recently retired practitioners and individuals representing the public interest. The public interest members will comprise the majority on the Committee.

Howard Davies said:

The Committee has been shaped by responses to our earlier consultation on how we make enforcement decisions, though it will now take decisions ranging across all of our regulatory activities. Parliament has given the FSA powers which could have a fundamental impact on firms or individuals and we believe that those powers should be exercised in a way that ensures a high degree of independence from FSA staff. We will be consulting later in the summer on the full details of these arrangements.

The sorts of decisions made by the Committee will include refusal of applications for authorisation, cancellation of permission to conduct regulated activities, disciplinary cases (e.g. fines or public censure) and decisions which fundamentally change the nature of what the firm is permitted to do (e.g. preventing firms taking on new business or handling client money, or requiring a firm to take its sales force off the road for an extended period).

The appointment of the Chairman of the RDC will be made by the FSA Board on the recommendation of a nominating group comprising Stewart Boyd QC (the FSAs non-executive Deputy Chairman), Colin Brown (Vice Chairman of the Financial Services Consumer Panel) and David Challen (Chairman of the Financial Services Practitioner Forum).

Notes for editors

1. A chart setting out the new senior management structure is attached.

2. Mr Davies was addressing the FSAs first Annual Meeting held at Canary Wharf in London. Representatives of consumers and of the regulated industry attended the Meeting. It was held in anticipation of the requirement in the Financial Services and Markets Act for the FSA to organise an annual public meeting so as to allow a general discussion of the contents of its Annual Report. The FSA will publish later a report of the Annual Meeting.

3. The FSA is the independent body established by Parliament to regulate the financial services industry. Its four statutory objectives under the Financial Services and Markets Act are: market confidence, consumer awareness, consumer protection and fighting financial crime.