Speaking at a British Bankers’ Association briefing today he hailed the new model as the “new world of judgement-based regulation.”

The new model will mean banks, building societies, insurers and major investment firms will become ‘dual regulated’.

This means they will be supervised by one team focusing on prudential supervision and one team focusing on conduct.

All other firms, including financial advisers, will be supervised by the conduct team only.

Supervisors on the two teams would make their own separate regulatory judgements based on different objectives while ‘independent but coordinated regulation’ would increase the exchange of information between the two.

The change comes ahead of the move to the Prudential Regulation Authority and Financial Conduct Authority in 2013.

The FSA hopes by implementing a twin peaks model early, it will cause minimum disruption when the PRA and FCA are formed.

Mr Sants said: “The move to twin peaks is an opportunity to drive home and further embed the move to forward-looking, proactive, judgement-based supervision.

“The most important change that will occur at twin peaks, in my judgement, is not the introduction of a new operational framework, but the opportunity to accelerate the process of behavioural change that the FSA embarked on when we began the reform of the supervisory approach in the spring of 2008.”