As noted today on Compliance Week's Scuttlebutt blog, Margaret Cole of the UK's FSA is stepping down after seven years with that agency. Through the years, Cole has served many roles with the FSA, most notably that of director of enforcement. In April 2011, Cole became the interim managing director of the Conduct Business Unit, which will become the Financial Conduct Authority under the new regulatory structure. 

During Cole's seven years with the regulator, the FSA has exhibited a notable shift in its approach enforcement. For many years, the FSA prided itself on its philosophy of “light touch,” principle-based regulation. In a speech in October 2006, Cole argued that this “light touch” had helped London become the world's leading center for mobile capital. As I wrote about that speech in a column back in 2010, Cole

emphasized that the FSA was simply not an “enforcement-led regulator,” and boasted that it resorted to enforcement measures only “strategically, for the most egregious cases.” Enforcement, she said, was just “one of a range of tools available to deal with non-compliant behavior,” and not even the most widely used.

... Cole made a point to note that the FSA had used its criminal powers against someone who had committed market abuse only once in its history. She said that cultural and environmental differences between Britain and the United States helped explain the nations' “different appetite for prosecution of major corporate and financial scandals;” she seemed to take pride in the fact that her team of 280 enforcement staffers were just 8 percent of the total staff at the FSA, while the Division of Enforcement makes up more than half the personnel at the U.S. Securities and Exchange Commission. Cole's overall message to regulated entities seemed clear: Don't worry—unlike the SEC, we'll leave you alone unless you go way across the line.

By 2009, however, the FSA, like the SEC, was under intense scrutiny stemming from the financial crisis, and decided it needed to make a dramatic change. As the FSA's CEO at the time, Hector Sants, put it: “There is a view that people are not frightened of the FSA. I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA.”

Since the change in philosophy in 2009, Cole aggressively led the FSA to bring more enforcement actions, including a barrage of criminal insider trading cases (previously unheard of in the UK); government "swoops" where dozens of FSA agents and London police officers raided London businesses to execute arrests and search warrants; and tougher penalties for financial crimes.

The Telegraph reports that Cole's decision to leave the FSA comes after she was not offered the top job at the Financial Conduct Authority when it succeeds the FSA in 2013. Cole reportedly has not decided where she will go after leaving the FSA, and will "continue to work at the FSA for a limited period of time before going on six months' gardening leave."

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