Sir Howard Davies will be a hard act to follow as head of the Financial Services Authority (FSA) in the UK – not least because the expectations placed on financial regulation are becoming increasingly unrealistic.

Viewed from an international perspective, the FSA has been an outstanding British success story and a model for other countries such as Germany, Ireland and Japan to follow. No one questions the compelling logic behind its creation. As the distinction between banking and the securities business has become blurred, it makes sense to have a single regulator to oversee the financial conglomerates that have come to dominate financial markets.