Hector Sants, chief executive at the FSA and chief executive designate for the Prudential Regulatory Authority, said: “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.
“But unless the outcomes those tools are designed to achieve are aligned with society’s expectations, the regulator will not have the necessary mandate to operate, nor will it be a sustainable institution. As I have said before this was undoubtedly a problem for the FSA.”
Margaret Cole, interim managing director of the conduct business unit at the FSA, added: “The failures of the past ten 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.
“The FCA approach document and today’s conference are our first steps in rising to this challenge. 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. What it can be expected to do and achieve and what is outside its remit, undesirable or impossible to achieve should be clearly understood.
“Central to this is the recognition that the FCA will not be able to prevent all failures either of individual firms or in the way that firms treat their customers.”
