Sants admits FSA accountability issues; says sorry for RDR response

Hector Sants, chief executive of the Financial Services Authority (FSA), has admitted accountability issues with parliament and apologised for ill-feeling caused by the FSA's refusal to delay the retail distribution review (RDR).

In July, the Treasury Select Committee (TSC) recommended the FSA delay the RDR by a year and to take a case-by-case approach to allowing grandfathering.

The FSA rebuffed all of the TSC's recommendations, on the same day they were published by the MPs.

In a TSC evidence session on the Financial Conduct Authority (FCA), which will replace the FSA, conservative MP for Wyre Forest Mark Garnier demanded an explanation from Sants.

Garnier said the speed with which the FSA responded to the report suggested it had not properly considered the proposals.

"Some feel your response to our RDR report holds this committee and parliament in contempt," Garnier said.

Sants, pictured, said: "I am very sorry if we gave that impression.

"We felt under media pressure to respond. We were afraid the press would report that the RDR was delayed, and the option of considering your recommendations would be taken from us.

"We want proper accountability to the TSC and parliament," he said.

The MP said even if the regulator is fully accountable there is a perception that it is not, and asked Sants how the FCA will deal with this.

Sants said: "We have given considerable thought to this.

"There was not sufficient alignment between the FSA's philosophy and parliament's view.

"Regulators should be accountable for discharging their statutory duties and to report transparently, so we need simpler and clearer objectives that can be transparently discussed."

Lord Turner, the chairman of the FSA, said publishing the FSA and future regulators' board meeting minutes, as the Bank of England does, could be another way to improve accountability.