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Bank chiefs believe FSA staff “too junior”, says King

KING

Bank chiefs believe the FSA staff tasked with challenging their risk-taking strategies are too junior for the role, according to Bank of England governor Mervyn King (pictured).

Speaking in this morning’s Treasury select committee evidence session, King said he has been told by the chief executives of the UK’s major banks that the staff sent to meet with lenders are not experienced enough.

He said: “Many of the bank chief executives that I talk to about this have themselves said that in the past, when they have had meetings with the FSA, they have met levels of staff who are, to be honest, too junior to be engaged in those conversations and do not challenge the senior management in a way they ought to be challenged. And that is one of the important changes of style which we want to bring about.”

He added this would be addressed under the new regulator.

He said: “The right response to the crisis is not to say we should have had twice as many regulators, or twice as many rules, or twice as many requirements. That is not the answer. The answer is to have the right kind of people supervising, and that is one of the things we are looking at in the Bank.”

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. John Blackmore 1st March 2011 at 1:45 pm

    “Those who can do and those who can’t regulate”

  2. Of course, the Bank did a blinding job of having the right people to talk to BCCI…

  3. Hs Ha Ha, Ho Ho Ho

  4. Breaker Morant 1st March 2011 at 2:08 pm

    Nobody should really be surprised at the Governor’s comments, and I suggest a large pinch of salt is required when considering his assertion that things will change in the new regulatory structure.

    Credible, experienced staff take time to develop and command decent salaries. For many years the FSA has promoted a culture that does not seek to reward experience but rather to hire keen young men and women who can be paid less than the going rate. When these keen young things leave they are replaced by more KYTs. At the same time those members of staff with more than 5-8 yrs experience become fewer and fewer and there’s no one to support and mentor the new staff.

    The FSA must be one of the few institutions where corporate knowledge and experience is not rewarded. There is not even recognition of staff that pass milestones like 10/20/30 yrs with the regulator. The reason given is that this would be age discriminatory!

    So, muted cheers for the brave new world of fairly rewarded experienced regulators. I’ll believe it when I see it.

  5. Refreshing new twist on the “It wasn’t me, a big boy made me do it” with what is effectively “sorry, I do it but the little boy didn’t stop me doing it”,

  6. Has been blindingly obvious for ages. Most of my dealings with the FSA have been with staff just out of nappies with a degree in ‘media studies’ or some other obscure subject. Nice to know that Mervo has woken up and smelled the coffee.

  7. Lets be really honest here, as a broker the quality of staff sent by FSA would not give my 12 yr old daughter a hard time

  8. The arrogance of Bank executives beggars belief – they havent learnt any lessons and lets not forget King has been at the helm throughout this recession and has been as much use as a chocolate teapot .

  9. Mr King should have resigned when the full scale of what was coming the UK’s way did not cause him to flag it up with anyone.He REALLY did not have contacts in the city or with other central banks in the US or elsewhere that could have indicated the scale of financial meltdown that was coming our way during 2008? The same man was looking at putting interest rates up as late as June /July 2008.He didnt see how the fall of NRock was caused and what could happen with other banks? He was asleep on the job.Now he is never done espousing this or that and wants us all to listen and believe him? Plonker.

  10. Alasdair Sampson 1st March 2011 at 3:11 pm

    To Anon no. 3

    You may well be right that FSA staff sent out to your office would not give your 12 y.o. offspring (let’s not be gender specific here!) a hard time but unfortunately the FSA officers have enormous power at their finger tips and seem to be encouraged to use it.

    As so much seems to be determined not by reference to any objective test but by the personal likes and dislikes of the FSA officers concerned that then becomes a very dangerous combination.

    I have had to battle very hard indeed with FSA on behalf of a number of IFA clients to try to overcome that and I have learned that if I direct my arguments to an officer with sufficient seniority and experience, which generally means in Canary Wharf, and do so sufficiently aggressively, then I can get my clients’ case heard and listened to.

    An IFA client, a man who could not be described as a shrinking violet, recently said to me that he wouldn’t have had the balls to do what we did had I not been acting for him.

    And regrettably that is what it takes to fight your corner with FSA – a lot courage and conviction that you are right (and me, of course!).

    I greatly doubt that very much will change after RDR and the re-design of the overall regime.

    it is hardly any wonder that so many contributors to this and other online news agencies are “Anonymous”.

  11. It takes courage for senior FSA management to employ people who have more years under their belts and far more comprehensive experience of FS at all levels from the ‘consumer’ to the ‘prosecutor’.

    AND, having looked at their recruitment process I can only assume it was created to specifically exclude these qualities.

    Ho hum, such is life!

    I deal with regulators every day, whether it be development control (prevention) or anything else supported by some hastily created legislation it is society that pays the ultimate price of failure, not them.

  12. Keith Davidson 1st March 2011 at 4:48 pm

    The same could be said about the Chancellor of the Exchequer.

  13. Good for the goose? 1st March 2011 at 7:02 pm

    The FSA should have at most 2 years to pass higher exams and obtain much more pertinent qualifications, NO GRANDFATHERING for anyone and if they don’t make it, they are out of acjob!!

    And another thing, they have to pay for the study themselves, in their own time.

    Try that out FSA!!!!

  14. Julian Stevens 1st March 2011 at 7:26 pm

    “Junior”. Now there’s a nice euphemism.

  15. King apparently has a degree in the bleeding obvious.

    Pity he didn’t see the crash coming about which this little IFA was warning his clients 4 YEARS AGO!

  16. Interesting point and basically he is right. You could argue the same about advisers when they meet with clients – experience is required and a lot of that experience will be lost due to the RDR (which is not to say the RDR is wrong). Also whenever a firm cuts back on costs, it is often the middle management that goes along with much experience. It is not easy to replace – or cheap. Experience employees tend to be expensive ones.
    If you want to know how a poacher works, employ one but make sure that it pays for him to work for you that to poach. That is the problem with the regulator, experienced people will cost money and that will come from our purses.

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