Hector Sants, the chief executive officer of the U.K. Financial Services Authority, urged senior bankers to make restrained decisions on pay and be “ethical” in his final speech as the U.K.’s top regulator.
The FSA will “encourage firms to do more to give weight to non-financial metrics,” rather than focusing on returns on investments, when setting senior banker pay, Sants told financial executives in London today.
“It shouldn’t be about how much we earn, but how much we care about the well-being” of all those affected by financial markets, Sants said in his last public appearance.
Sants, 56, will step down from his post at the end of June after leading the regulator through much of the global financial crisis. During his five years as FSA CEO, Sants led a crackdown on banks’ misselling of payment protection insurance to consumers and led an overhaul of the financial regulator following the near collapse of Northern Rock Plc and Royal Bank of Scotland Group Plc. (RBS)
He urged bankers to make decisions based on principles, “rather than short-term commercial considerations,” and said “ultimately firms fail because of decisions taken by firms and their management” rather because of weak financial rules.
Looking relaxed, leaning on the lectern with a hand on hip, Sants answered questions from delegates on attempts by the European Union to have harmonized rules that may curb national regulators’ power to set their own capital levels for banks.
“If you have a situation where everything is ‘maximum harmonized’ then you have a risk that a supervisor just won’t be able to do its job,” Sants said. “The government needs to be very focused on that.”
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