Following Wednesday’s news that Hector Sants, chief executive of the Financial Services Authority is to step down, uncertainty reigns over the future of the regulator, leading industry figures to call on the government for clarity to protect the UK’s status as a financial centre.

As the UK financial services industry digests the news of Mr Sants’ decision to relinquish his position in the summer, speculation over his replacement – and even the regulator’s future – has been rife.

Yesterday events took another twist as The Telegraph reported that the treasury had instructed the FSA not to begin looking for Mr Sant’s successor until after the general election, which is expected in May. An FSA spokesperson declined to comment on the veracity of the report when contacted by WealthBriefing and said that an announcement on the process for appointing a successor would be made in due course.

But it is not just the appointment of a new CEO which is troubling the financial services industry so much as whether the regulator will actually exist in its current form after the election. The opposition Conservative party pledged last year that if it won power it would effectively hand back the FSA’s power to a beefed-up Bank of England. This level of doubt is, understandably, causing no small amount of consternation in the industry.

“The FSA has historically given the UK an edge over other financial centres,” said Jérôme de Lavenère Lussan, chief executive of Laven Partners, the investment management consultancy. “This is the time to show cohesion and strength in our regulatory framework and build on the proactive enforcement the FSA has recently demonstrated. This requires a strong regulatory body, yet even the future of the FSA has been thrown into question by the Conservatives’ plans to disband the organisation.

“The Conservatives have not given a clear explanation of its proposed alternative to the FSA, the FSA has not given a clear vision for its future without Mr Sants at the helm. 2009 showed huge improvement in market conditions but we are far from clear of the economic crisis and market participants need reassurance and stability from the government and regulators. This is vital if we are to protect our position as a leading global financial centre,” he said.

As Mr de Lavenère points out, government action may be pushing asset managers to consider relocating to alternative financial centres such as Ireland, Luxembourg and Switzerland. This is added to the new proposed 50 per cent tax on the highest earners, which many say will chase individuals like hedge funds managers out of the UK.

“The UK financial industry provides significant jobs and tax revenues for this country, and if this is to be protected the government and regulator must provide clarity,” Mr de Lavenère said.