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KPMG’s UK chairman John Griffith-Jones has been appointed as the new head of the Financial Conduct Authority.
The FCA will be one of the new ‘twin peak’ UK regulatory bodies for the financial services industry, replacing the Financial Services Authority (FSA) once the Financial Services Bill kicks in early next year.
Griffith-Jones will join the FSA board as a non-executive director and deputy chair in September, a month after he retires from KPMG, where he has been since 1975.He will become non-executive chair of the FCA in early 2013.
Lord Turner remains executive chairman of the FSA until its transition into the Prudential Regulation Authority (PRA) and FCA is complete.
Neither the Treasury nor the FCA would divulge what salary package – derived from a levy on industry - Griffith-Jones would command, both giving the line that it would only be revealed in the next annual report.
FSA chairman, Adair Turner's pay package for 2010/11 was £500,276 including performance related bonuses, pension and other payments.
Previous London Stock Exchange director, Martin Wheatley, currently a managing director of the FSA, was appointed last year by the Treasury as the CEO designate of the FCA.
The appointment of Griffith-Jones follows criticism of Big Four firms in recent years in their role of auditors of several large banks which failed during the global financial crisis. Investigating the issues that led to the crisis, parliamentary committees as well as the profession’s regulator, the Financial Reporting Council, slammed the auditors for failing to question the assumptions about risk models, made by senior bank managers.
The firms may also be in line for regulatory overhaul if the European Commission decides to go ahead with recommendations to split their audit arms from their consultancy divisions, in order to promote better audit choice in the market and eradicate possible conflicts of interest.
Investor lobby group PIRC - a champion of good corporate governance in the UK – expressed ‘surprise’ at the selection and highlighted that government committees also questioned whether auditors could have mitigated the banking crisis of 2008 by alerting investors to the riskiness of the assets held by banks.
‘The appointment is surprising given that both the Treasury select committee and the House of Lords economic affairs committee have had unanswered questions regarding the audits of failed banks,’ a PIRC spokesman said.
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