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Thursday, 12 December, 2002, 18:05 GMT
Financial regulator to resign
Sir Howard Davies, chairman, Financial Services Authority
Sir Howard can look back on an impressive career
Sir Howard Davies, the chairman of the UK's financial markets watchdog, is to become director of London School of Economics and Political Science (LSE), the LSE has told BBC News Online.

Sir Howard will leave the Financial Services Authority (FSA) in September, four months early, and take over at the LSE on 1 October 2003, the FSA said, declining to comment further.

Sir Howard had the right attitude I see his resignation as a failure of the FSA not the individual.

Sheila McKechnie, Director of the Consumers' Association

"I am greatly looking forward to working with staff and students at LSE," Sir Howard said.

"The School's national and international reputation is second to none; it will be a privilege to lead it through its next stage of development."

Failure?

Coming only days after the FSA's first anniversary, Sir Howard's decision is a shock.

"It's an earthquake," said Redmayne Bentley Stockbrokers director Richard Grossman.

"Davies has been a voice of reason and proportionality in circumstances that haven't always been easy," said James Perry, a partner at law firm Ashurst Morris.

But other financial market officials were less generous, describing Sir Howard's time with the FSA as a failure.

'Asleep on the job'

Sheila McKechnie, Director of the Consumers' Association told BBC News Online in the immediate aftermath of the announcement.

"It is not a good time to change the person at the top. Sir Howard had the right attitude I see his resignation as a failure of the FSA not the individual."

The Consumers' Association has been a heavy critic of the FSA in the past suggesting it was "asleep on the job" when it came to its handling of the endowment mis-selling scandal.

Financial giant

At 51, Sir Howard can look back on an impressive career.

He is a former deputy governor of the Bank of England and he had been tipped as Sir Edward George's successor to the top job.

However, last month, deputy governor Mervyn King was appointed instead.

"In appointing Howard Davies, LSE has found a new head with broad experience, a sharp mind and a deep intellectual curiosity about the social sciences," Mr King said.

"Howard's commitment to academic excellence will be key in ensuring that LSE maintains and indeed improves its position as one of the major research universities of the world."

Replacement

The FSA was created last year to tighten financial regulation following the spectacular collapse of the investment bank Barings and other scandals during the 1990s.

It will be up to the Treasury to appoint a successor to Sir Howard and there are suggestions that his position may be split into two posts, namely chairman and chief executive.

However, such a move could well arouse much controversy within the FSA, according to sources close to the situation.

Ms McKechnie told BBC News Online that someone be appointed that would protect the consumer first and foremost.

"The FSA needs someone from the outside to clean up the financial services industry, consumers are leaving in droves and confidence is at a low ebb."

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Richard Saunders, UK Investment Mangement Assoc
"The FSA is not trying to run a nil failure regime.".
See also:

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