The Financial Services Authority (FSA) wants the power to ban individuals while it is still investigating them for alleged wrongdoing.
Tracey McDermott, head of enforcement at the regulator, told MPs on the committee on banking standards yesterday that most FSA enforcement cases take over a year to conclude, and in that time those individuals being investigated are free to carry on working in the financial services industry.
The FSA wants the power to impose an interim prohibition order on individuals with a controlled function to ban them from practising while the regulator investigates them.
McDermott also revealed the FSA is running a pilot scheme probing those individuals in firms who hold a significant influence function (SIF).
Under pressure from MPs, McDermott stood by the FSA's enforcement system, saying it was "fit for purpose".
However she said there are "issues" around the regulator's ability to hold senior individuals to account.
The FSA prohibited 39 individuals last year and cancelled the permissions of about 42 firms, McDermott said.
The regulator also sent eleven people to prison last year, mainly for insider dealing, she said.
McDermott said under the incoming Financial Conduct Authority (FCA) the plan is to focus on "cradle to grave" regulation of the financial sector, which would include taking action against individuals who aren't approved by the regulator.
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected