Hector Sants vows not to let up at FSA despite decision to abolish watchdog

Hector Sants, the man who Chancellor George Osborne begged to stay on for an extra three years as chief executive of the Financial Services Authority, today made it clear its break-up is the least of his worries.

Osborne announced last week that the FSA will be abolished in 2013 with its powers going to the Bank of England, a new consumer and markets organisation and an economic crime unit.

Speaking at what would have been his last annual meeting, Sants said he had to "look beyond achieving the change in structure in the UK and focus on what I consider to be the far more difficult challenges".

Sants said the first focus must be on ensuring the UK is fully engaged with Europe as it takes over many of the national supervisory and regulatory powers.

But he also warned there must be no let up by the City watchdog as it is dismantled.

"As we move out of this crisis there will be calls for regulators to revert to light-touch regulation, and senior management will be less willing to listen to a regulator who could be seen to be second guessing' management," Sants said.

"When this happens it is vitally important that regulators stand their ground and continue to be proactive, but this will require that they are supported by government and society as a whole.