Speaking at the FSA annual public meeting, Sants said: “I have already said that the standard of supervision of Northern Rock prior to the summer of 2007 was unacceptable to the FSA and that we regret what happened. I have also said how important it is that we learn lessons from that failure. I believe we
have. Our Internal Audit report sets out clearly what we need to do. We have already made many of the necessary changes, and we will complete our Supervisory Enhancement Programme by the end of the year.
“As to the future? It is clear that the current year has as many challenges for us as the last. We have seen several acts playing out in the markets. The first act, last summer, was a liquidity crisis. In the autumn we moved into the second act where the concern has been about capital. We are now anticipating the third act, which is likely to feature a downturn in the real economy.
“The good news is that we are moving through the acts. But the risks in each are material and neither we nor our firms can afford to relax. Inevitably we will enter the final act the ‘new normal’. The new normal will require firms to adapt their business models, consumers their spending patterns and consequently generate new challenges and change for us.”
