Now that the UK’s new coalition Government has decided to do the kindest thing in regard to the FSA and have the watchdog put to sleep, a familiar name is about to come to the fore; that of Andrew Bailey, whose current role as chief cashier of the Bank of England sees his signature appearing on every English bank note issued. And with financial supervision and oversight of systemic risks now being moved back to the province of the Bank of England, Bailey is about to assert himself in a key role in his next job as deputy chief executive of the new Prudential Regulation Authority (PRA). The PRA will be charged with responsibility for banking supervision, whereby Bailey has already laid out his stall. During a BBC radio interview, (a rare event for usually taciturn Bank of England officials) – asked if he accepted that many banks had spent much of the last decade trying to pull the wool over the eyes of regulators – Bailey replied that he did accept that. "And the lesson from the last three years is that it must stop", he insisted, going on to outline how U.K. regulators will "start as sceptics" when it comes to large bonus payments for bankers in the future.

In light of the FSA’s imminent demise, Bailey dismissed the idea that the new regulatory arrangement was simply shifting around the same officials, saying the arrangements are "much more effective" by joining up supervisors of individual firms with those overseeing broader systemic risks within the BOE. The government has agreed on a two-year transition period for the new regulatory arrangements to be in place.

Bailey said regulators will do their utmost to prevent financial firms gaming regulators, saying "we're prepared to be as tough as it takes. We're not going to be browbeaten." He said that if a bank was always pushing the boundaries in issues like remuneration, regulators would be prepared to call in a firm's chairman and tell him to sack the chief executive. "If that's what it took, that's what we would do," he said.