Hector Sants, one of Britain's top financial regulators during the banking crisis of the past five years, has decided to step down as chief executive of the Financial Services Authority, in a move that deals a blow to current arrangements to overhaul the country's system of financial regulation.
Sants, who had been talked out of quitting two years ago by the U.K. finance minister George Osborne, will leave the organization at the end of June, the FSA said in a statement Friday. News of his departure came as a surprise as he was expected to head a new body overseeing the U.K.'s financial stability and become a deputy governor of the Bank of England when a new regulatory system comes into force next year.
A former Credit Suisse executive, Sants took the helm at the regulator in July 2007, just before the run on the Northern Rock bank, which proved to be the start of Britain's banking crisis.
The FSA was widely criticized for its failure to spot the stresses in Britain's banks and the U.K.'s new coalition government decided in June 2010 that it would change Britain's regulatory framework.
"When I agreed to stay on as CEO in 2010, I committed to stay and deliver an orderly transition to the government's new regulatory structure," Sants said. "The project is now firmly on track."
Sants, aged 56, had been tipped to take the helm of the Prudential Regulation Authority (PRA), one of two new organizations that will be replacing the FSA. The PRA, which will work under the Bank of England, will be responsible for banking supervision. A new Financial Conduct Authority will also be established to look after markets and consumer protection.
Adair Turner, the FSA's chairman, said the major reforms made within the organization since the financial crisis began would not have been possible with Sants.
"I am very sorry to see him leave but I understand his decision, now that he has delivered what he set out to achieve," Turner said.
Mervyn King, the governor of the Bank of England, said he was "very grateful" that Sants had decided to stay on longer than he had initially planned.
In a statement, the Bank of England said it will work with the Treasury to find a replacement for Sants. The appointment will be made by Osborne and the person appointed will take up the position when the PRA comes into existence next year. The head of the PRA will also be one of three deputy governors at the Bank of England.