John describes how the FSA regulates 30,000 firms in the UK. There can be 2 approaches to regulation: rules based (zero tolerance of failure, which is felt to be good for high risk industry such as aviation and the nuclear fuel industry) and principle based (gives freedom to companies and promotes innovation and competition, which is felt to be good for most businesses).
Principle based regulation requires people who are comfortable making decisions when there can be ambiguity. Crisis management needs to be well prepared but crucially also requires rapid decision making. A bad example of this is the tripartite system comprising the Bank of England, the Treasury and the FSA who work on a consensus based system; this means it is difficult to make important decisions quickly as there is no overall person in charge.
Overall he feels that regulation is a very challenging process where success cannot be broadcast but failure is heavily scrutinised.