It was announced today (6 February) that the FSA would adopt a ‘twin peaks’ model from April which would introduce two separate teams of supervisors.

Mr Sants was speaking at a British Bankers’ Association briefing.

He said said the biggest challenge for the twin peaks model would not be operational but rather the need to change the behaviour of firms and supervisors affected.

In order for the approach to work, Mr Sants said, firms would need to realise the importance of supervisory goals and proactively comply with supervisors and supervisory judgements.

He said: “We are not asking firms to forgo their right to challenge their supervisor if their decision have not been properly made.

“But we are suggesting that dragging their feet in complying with requests when it is obvious to all that the outcome is in the best interest of society as a whole is not a behaviour which should survive the new world.”

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.

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