Crime and Punishment?

Last week the FSA issued a consultation paper on it being given yet more powers.

This paper examines the regulatory framework for approved persons for when the FSA is replaced by the FCA and the PRA and follows recent FSA lobbying of the Parliamentary Commission on Banking Standards to see the FCA granted powers allowing it to take action against those who commit misconduct yet fall outside the scope of the approved persons regime.

This means that the FCA would be allowed to take action against individuals who breach a statement of principle, whether or not that is covered by their controlled function.

Now this is very worrying on a number of levels. As we all know, two tiers of crime and punishment exist in financial services, one determined by parliament, the other not. It is the latter that worries.

Not a day goes by at the moment without a dire regulatory warning, draconian punishment or fine being aimed at someone somewhere in the industry for some infraction of rules, process, activity or even merely for being.

I think that many casual observers, in light of the demands for even more power without responsibility, could be forgiven for thinking that the wealth the industry generates is being made to resemble the power plant in Mad Max, a pit of unctuous and ever boiling cess that needs to be very carefully controlled or it will destroy all who rely on it’s energy supply along with the poor consumer.

Regulation brings with it control, caution and it would now appear ‘cess’ management. I cannot recall a time where the image and reputation of this industry has been so vilified by those who regulate it, and to date, so badly.

A regulator should of course ensure good practice at all levels, it should also have some sensibilities toward the negative consumer impact it’s actions, or lack of them has on individuals and organisations, some deserving of it we know, some not.

But, all is not rotten in the financial services world, in fact there is and always has been huge amounts of good within it, professionally carried out with great care and the desire to do the best one can for the most valuable business asset- the client.

If what we are seeing is a layer by layer retro dissection of all that is so wrong in the industry, perhaps the time come to stop the regulatory tinkering and tuning and call for an industry ‘time out’ to put it right once and for all?

Yes, a complete HALT to all new activities and a thorough ground up, brown site clear up and regeneration?

Regulation is a continuous hotchpotch of diktat, threat, rethinks, failures and fines presiding over this so called heaving mass of detrimental consumer toxicity. Much of what we see today in the industry is as a result of yesterday’s mistakes and failures that nobody ever seems to learn from.

Yet this perfect example of bad practice perpetual motion continues today in the form of poorly thought out regulation that allows for the bad products and practices of a minority to be found out too late, resulting in more regulation at more cost followed by another batch of bad product and practices by the same few and yes, you guessed it, to be peddled for huge gain at the expense of consumers who have to be compensated- again.


Well regulation is an industry and without something to bash it would have no purpose. As Keith Richards (Rolling Stone not Tenet) once said “In the business of crime there’s two people involved, and that’s the criminal and the cops. It’s in both their interests to keep crime a business, otherwise they’re both out of a job.”

With these latest FSA proposals under consultation, the FCA and the PRA would be able to take disciplinary action against a person who has failed to comply with any statement of principle issued relating to conduct both within their controlled function and in their wider role.

The FCA will have yet more power, still without responsibility, as it will be allowed to issue statements of principle for the conduct expected of persons approved by either regulator.

Do ‘consult’ now, it may not be too late to have your voice heard. Comments may be sent by electronic submission using this form on the FSA’s website .

If you responding in writing to several chapters, please send your comments to Roslyn Anderson in Communications, who will pass your response on as appropriate.

All responses should be sent to: Financial Services Authority

25 The North Colonnade Canary Wharf

London E14 5HS


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