Shake-up for the City watchdog

THE Financial Services Authority has unveiled a radical management overhaul to counter criticisms that it is failing to spot mis-selling scandals or act swiftly enough to root out market abuse.

The FSA, which became the markets' super-regulator three years ago, has taken sustained flak for the split capital trusts affair and insurance scandals.

MPs accused it of being a soft touch after it fined Lloyds TSB just £1.9m for mis-selling risky bonds.

But insiders say chief executive John Tiner, who took over from Sir Howard Davies in September, is in a 'let's do the job' mood.

As he moved to stamp his authority on the FSA, Tiner set out plans to form three new business units reporting to managing directors. They cover wholesale markets, retail markets and regulatory services.

The split is designed to make the regulator more efficient and speed up investigations. The £300,000-a-year MDs will sit on the FSA board. Tiner will also recruit eight sector leaders to preside over areas such as banking, capital markets, insurance and financial crime.

As well as taking charge of the FSA's enforcement division, which investigates market abuse claims, Tiner will set up a finance, strategy and risk division, also reporting to him.

The shake-up by Tiner and his new chairman Callum McCarthy is also in preparation for 2005, when the FSA takes responsibility for the mortgage and general insurance markets.

As the new order is formed, the old guard - many linked to the Bank of England - are moving on. Managing director Carol Sergeant is quitting to join Lloyds TSB and fellow MD Michael Foot will step down next year. Foot, who has been with the FSA since the beginning, will stay on as an adviser.