Ms Dewar is now due to leave the industry regulator in May of next year, despite many commentators tipping her to be the successor to departing chief executive Hector Sants.
Mr Sants is expected to stand down from his role with the body in the summer of this year.
She said: âHaving reflected and made the decision not to put myself forward for the chief executive role, regardless of future regulatory structure, I feel that now is the right time for me to step down from the FSA board and pursue new opportunities.
âIt has been an extraordinary time and one which has had a lasting impact both on the FSA but also on me personally.â
Before the new coalition government was formed, the Conservative Party had called for the FSA to be abolished and its powers to be handed over to the Bank of England.
However, since the party joined together with the Liberal Democrats in the wake of Labourâs election defeat, the fate of the FSA has remained unclear.
George Osborne, chancellor of the exchequer, is expected to outline his proposals for the future of the body over the next few weeks.
By Jim Ottewill