Sants tells investors to toughen up oversight

The chief executive of the Financial Services Authority has told investors they must work harder to challenge companies on strategy, pay and risks to help avert another financial crisis. Hector Sants said investors relied too heavily on company statements instead of asking management their own questions. They should also oppose bad proposals before they reach a shareholder vote, by when the stakes are often too high to vote no, he told a National Association of Pension Funds conference.

Investors should come down hard on excessive pay, not just for directors but further down the company, he said. Mr Sants added: "A lesson for you from this crisis must be that greater interrogation of how well a company is managed and the adequacy of its risk controls are all material factors fundamental to investment management."

He told investors they had relied too much on credit ratings and had not understood products they bought in seeking high returns.