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A matter of principles

The recent article in Money Marketing headlined, FSA pledges plain principles, did make me smile.

We have a number of cases in the office where clients have been threatened with disciplinary action, not because they have broken the rules but because they are going against “principles” espoused by the FSA.

In some cases, the actions taken by our clients preceded any statement of “principle” from the FSA but the FSA continues to seek to apply these principles. This used to be called retrospective legislation and was generally considered to be something that should not be done.

In other cases, when we have asked for clarifi- cation of the “principles” that would apply, we have had conflicting and contradictory advice from the FSA.

Rules properly considered, promulgated and passed into force give everyone a better under-standing of what is required of them than some woolly “principle” enunciated in a press release or speech.

Indeed, the tendency towards rule making by press release and speech-making is something that most observers find deeply worrying. If the conseq-uences were not so serious for many of our clients, I would suggest that the “principles-based approach” should be renamed the “comedy-based approach” to regulation.

This approach is deeply worrying and deserves more comment than it gets. It attacks, at a deep level, the rule of law that we sometimes take for granted but without which no commercial (or indeed social) system can operate adequately.

Paul CrutchleyFinancial Services Legal LLP,



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