The man tasked with regulating the City in the run-up to the near-collapse of the UK banking system has been knighted in the Queen’s New Year Honours.
Former Financial Services Authority (FSA) chief executive Hector Sants has been recognised for services to financial regulation after overseeing sweeping reforms following the nationalisation of Northern Rock and the bailout of major banks.
The knighthood may be seen as a controversial decision, as it was Sir Hector who led the organisation accused by MPs of being “asleep at the wheel” in the run up to the collapse of Northern Rock.
While he was criticised for the FSA’s failure to spot and prevent the credit crunch and subsequent banking meltdown, he has since won praise for cleaning up the regulator and for his role in forcing banks to beef up their balance sheets.
Sir Hector said the award was a “testament to the hard work of everyone at the FSA during the crisis, their willingness to learn lessons and to bring about the changes that were necessary”.
The 56-year-old had planned to leave his role in February 2010, but was convinced by Chancellor George Osborne to stay on to see through the coalition’s break-up of the FSA.
It was thought he would become a deputy governor of the Bank of England and head the Prudential Regulation Authority (PRA) – one of two new regulatory bodies that will replace the FSA as part of an overhaul in the wake of the financial crisis.
But Sir Hector unexpectedly resigned earlier this year and has courted more controversy, joining scandal-hit Barclays, where he will become the bank’s first point of contact for regulators.
He is believed to be in line for a £3m pay package.
The FSA received a mauling from MPs in the wake of the banking crisis and collapse of Northern Rock.
Northern Rock had to be nationalised in 2008, with the Government also having to bail out Royal Bank of Scotland, Lloyds TSB and HBOS.
In the aftermath of the crisis, Sir Hector warned the City to “be frightened” as he pledged an era of more intrusive and direct regulation.
He also laid the blame at the door of the US and UK governments for their part in the crisis, saying authorities worldwide sought to “encourage a significant credit boom particularly for the benefit of consumers who wished to purchase housing”.
Sir Hector joined the FSA wholesale markets arm from Credit Suisse in 2004. He became chief executive in 2007 – just two months before the run on Northern Rock.
It had been widely expected that Sir Hector would return to the private sector when he resigned from the FSA.
Barclays, which has had its reputation battered following this summer’s rate-rigging revelations, has appointed Sir Hector to the newly-created role of head of compliance. He is due to start on January 21.
It is believed he will also play a central role in rewriting the bank’s pay and bonus strategy.
Sir Hector is married with three children.
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Article source: http://news.sky.com/story/1031086