Eyebrows were raised when a man was awarded a knighthood despite being accused of being 'asleep at the wheel' by the Treasury Select Committee chairman John McFall as the UK fell over the fiscal cliff.
Sir Hector Sants was in charge of the Financial Services Authority when RBS, HBOS, Northern Rock, Bradford & Bingley, Alliance & Leicester and Dunfermline Building Society all failed leaving the UK taxpayers to pick up the tab.
In mitigation, Sir Hector said that the FSA was generally powerless and in the case of RBS it wasn't able to prevent them from buying ABN Amro for £40Bn which hastened the collapse of the bank. The Dutch bank ABN Amro turned out to be pretty much worthless. He also told the Treasury Select Committee inquiry that he personally ordered RBS’s former chief executive Fred Goodwin to raise fresh capital via a rights issue in order to help stave off the collapse. The £12Bn the bank raised from institutional and retail investors was almost entirely lost since the bank was bust five months later.
Sir Hector joined the FSA in 2004 and said "insider trading and market abuse have been top of his hit list" and he "introduced a more "pro-active" approach to regulation".
Despite being a 'powerless and ineffective institution' the pay at the FSA was excellent at £807,000 per year for Sir Hector.
Sir Hector won't be running the new 'Prudential Regulatory Authority' which will take over control from the FSA next year. He is moving to Barclays in January on a £3m package as Head of Compliance and Regulation. Sir Hector stepped down from the FSA in June this year in the same month the FSA fined Barclays £59.5m for manipulating the interbank borrowing rate (Libor).
UK declared debt has more than doubled under the leadership of Sir Hector and is reaching 100% of our GDP at over £1trillion pounds. Hidden debt ( PFI, public sector pensions, bank underwriting etc), is thought to be between £4trillion and £7trillion but may be higher.