Hector Sants, current chief executive of the Financial Services Authority (FSA), is not the right man to lead the London-based regulator's successor body the Prudential Regulatory Authority (PRA), one of the Conservative Party's chief spokesmen on financial services has declared.
"I have deep reservations about Hector Sants getting the PRA role," said Michael Fallon MP, a senior member of the cross-party Treasury Select Committee.
"It's fair to say other members of the committee share my reservations about his suitability," he added.
Sants, who defended his track record at a hearing of the Treasury select committee on January 30, is to come before the committee again to explain his suitability for the role.
A spokesman for the Treasury committee said the planned "pre-appointment hearing" has not yet been scheduled but should happen "before the summer".
The FSA, whose credibility was badly dented in the financial crisis, will be disbanded in 2013, with some of its functions being transferred to the new PRA with others moving to a planned Financial Conduct Authority. The shift to a "twin peaks" regulatory approach starts internally next month.
The PRA will take over responsibility for all so-called "micro-prudential supervision", including much of the day-to-day supervision of banks, building societies, insurers, fund managers and brokers.
The PRA will be a subsidiary of the Bank of England and whoever gets the top job will also become deputy governor of the bank.
Sants, who earned £807,000 as FSA chief executive in 2010, joined the regulator from investment bank Credit Suisse First Boston in 2004 and became the regulator's chief executive in July 2007. He was in the role during the build-up to the near-collapse of the UK's financial system in September and October 2008, and critics argue he could have done more to prevent this.
Since the crisis Sants has been focused on steering the FSA away from its earlier "light-touch" approach and towards something more intrusive. Sants has said he wants to see "forward-looking, proactive, judgment-based supervision".
After the Coalition Government confirmed it would dismantle the FSA, Sants resigned from the CEO role on February 9, 2010 but is understood to have been persuaded to stay on by FSA chairman, Lord Turner.
If the Treasury Select Committee does not back Sants for the Prudential Regulatory Authority role, Chancellor George Osborne and the Treasury will come under pressure to explain why they believe him to be a suitable candidate.
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