The Financial Conduct Authority's (FCA) outgoing chief executive Andrew Bailey has said the Woodford debacle was not "illustrative of a wider problem in the asset management industry."
Speaking on an FCA podcast, the incoming Bank of England governor has admitted that he is concerned about how ill-prepared the UK is for a prolonged fall in the stock market or house prices.
Bailey added: "There hasn't been a major fall in asset prices now since the [global financial] crisis and of course, we don't want one to happen, but they do happen."
He was their hero until he wasn't and then he became the villain and he didn't manage his funds well"
"I do think that there is not as great an understanding of what the consequences of that could be," pointing to the fall from grace of fund manager Neil Woodford as the most prominent event to demonstrate the issue last year.
Bailey, who is due to become the 121st governor of the Bank of England on March 16, said that Britons had become "far more exposed to asset prices", partly because of changes to pension rules.
Bailey's period in charge of the Financial Conduct Authority was marked by a series of investment scandals, including the £237m London Capital & Finance collapse and the freezing of the stock-picker Neil Woodford's investment funds.
Bailey said: "Here's somebody who'd become a star fund manager, built up a sort of following and a reputation acres of personal finance journalistic columns devoted to him.
"He was their hero until he wasn't and then he became the villain and he didn't manage his funds well."
Bailey, 60, said that people must take responsibility for their investments and not expect regulators to bail them out.
"We cannot live in a world where people think that the FCA will protect them against falls in asset values, that will not happen. It's not a society we can live in. It's not an economy we can live in," Mr Bailey said.
"People need to understand the risks they're taking and . . . manage their exposure to those risks accordingly."
Christopher Woolard named interim head
Christopher Woolard has been named the interim chief executive of the UK's financial watchdog until a permanent replacement to Andrew Bailey is found.
Woolard, the Financial Conduct Authority's "thinker-in-chief", was one of two favourites and trusted lieutenants of Bailey long tipped to succeed him, beating Megan Butler, who heads up supervision at the watchdog. The FCA board, on which Woolard already sits, recommended him to the Treasury, which approved his appointment, the FCA said in a statement on Friday.