FSA founder says scrapping regulator is a mistake
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The founding chairman of the FSA Howard Davies has warned that the Government is making a mistake by scrapping the regulator.
In an interview with the Daily Telegraph, Davies says the current Government should not have announced the scrapping of the FSA without consultation.
He says: “I think the Government is making a mistake in what it is doing. It would have been much better off to have had a process of consultation and consensus building over what shape of regulatory system we want.
“Curiously we have had two major reforms without consultation: the FSA reforms which were announced without consultation in 1997 and now a new lot of reforms that have just been announced and this is our most important industry in this country.”
Davies says the risk of creating a new regulator without consultation may mean the new Consumer Protection and Markets Authority is broken up by the next Government just as this one has broken up Labour’s regulator.
He says: “It would have been much better to try and build some consensus around how we want to regulate this industry rather than regulation being a political football.”
Davies also says the City is at risk from losing its status as one of the world’s main financial centres while politicians argue about the shape of regulation. He says: “There are considerable uncertainties about the regulatory environment here and markets do not like uncertainty.
“I hope over the next year or so the rhetoric does change we and get back to a more sensible dialogue between the politicians and the financial system.”
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Readers' comments (21)
Richard | 14 Sep 2010 9:47 am
Wonderful words from a person who was an integral part of forming what has become, "A Nighmare at the North Collonade"
It really should have been formed properly in the first place rather than allowing it to become an alternative employment opportunity for inept bankers and bonus structure w 'or' kers.
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Wayne Baber | 14 Sep 2010 9:53 am
Seems like Mr Davies is complaining about about the government doing exactly what the Regulator has been doing to the small IFA pretty much since its inception.
We would have liked a more sensible dialogue every time our regulator changed the goalposts with the benefit of hindsight.
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terry | 14 Sep 2010 9:58 am
Moaning about lack of consultation. The FSA does not consult the industry properly and even when they do, they still go down the route they want to anyway
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John Ellis | 14 Sep 2010 9:59 am
Absolutely right.
There is also the major issue that the changeover is almost certain to result in a period of confusion and reassessment, and hence ineffectiveness.
Allso, I doubt if the Bank of England would have performed any better than the FSA during the recent credit crisis; their performance prior to the Financial Services Act 1986 was not exactly inspiring; a main reason for the passage of that legislation by the then Tory Government.
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Mike H | 14 Sep 2010 10:04 am
His point seems pretty valid to me. He's pointing out that in the incoming Labour Government Dear Gordon wanted to be seen to be reforming the sector and so drove through the formation of the FSA and in doing so lost a lot of the regulatory structures which had previously worked effectively and prevented financial meltdowns in the past.
Now, just when the realisation dawns as to what the FSA should be doing and we begin to build a more effective regulator, Vince and George decide it's politically expedient to throw the whole thing up in the air again.
Whilst many might celebrate the demise of the FSA the reality is that we are probably going to have 3 years of moving the furniture around again before the new lot have worked out what they should be doing.
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Anonymous | 14 Sep 2010 10:04 am
Where is the scrappage? I thought the FSA will 'become' the CPMA (as per the recent Treasury Consultation Paper) and will continue with the RDR, the MMR etc. The CPMA will certainly have less on its plate than the FSA has at present which is long overdue and one of the reasons the Tripartite system did not work.
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Anonymous | 14 Sep 2010 10:05 am
With all due Mr Davies, if the FSA has stuck with its draft brief of regulating the industry in a gentlemanly and accountable manner, I would agree entirely.
However, it somehow morphed into an Ogre which contols and manipulates the industry by fear and intimidation, at immense cost to customers, providers and distributors alike.
Whilst positioning itself beyond legal recourse from the terrified regulated, it believed itself to be beyond the reach of its masters in Parliament.
This has since proved to be a gamble as flawed as the punts of the casino banks which it allowed to spin the wheel on its inept watch with catastrphic results which almost destroyed the economy.
It forced itself into the firing line and the Chancellors bullet has proved accurate, timely and hopefully terminal.
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Pissed Off IFA | 14 Sep 2010 10:06 am
What is he moaning about? Life moves on, we have seen Lautro, Fimbra etc and PIA disappear so we why should the FSA not disappear to? The "team" from Canary Wharf wll reinvent themselves and there will be jobs for the boys and girls. Howard has milked the FSA for years.
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Michael Fallas | 14 Sep 2010 10:09 am
Well as others have said, what else would you expect him to say.
Regulation is now as much the cause of the problems we have as it is the solution and Mr Davies should take some of the blame, but of course he would never do that now would he?
Interesting to see that Iceland is looking at taking to court it's previous Prime Minister and other ministers for negligence prior to the financial crisis.
Why are we not doing the same?
If these is no "accountability" for any of those who serve the country and are paid by the tax payer then what is the point?
There is no "accountability" in the FSA either it would seem. We just have to pay regardless.
That is why we have many of the problems we have, "no one" is responsible and until that changes we can expect more of the same.
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Peter Herd | 14 Sep 2010 10:11 am
This from a man that headed an organisation that did little or nothing to regulate our Banks. Indeed in the time that the FSA has been in place Bank Insurance has had more complaints than the endowment and pension mis-selling scandals put together.
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