Former FSA head of ethics David Jackman has blasted financial services regulation as “vindictive” and says the UK will need a new regulator by 2020.
Writing in Banking 2020: A Vision for the future, a New Economics Foundation report published this week, Jackman, who helped set up the FSA and left in 2003, says the Financial Conduct Authority is relying on “placebo” regulation.
He says: “I am fairly sure history will repeat itself and we will be looking for a single regulator by 2020. The twin peaks system will struggle because there is no longer one institution balancing tensions between practitioners and service users.
“The current structure is motivated by political vindictiveness and a desire for a fresh start. It is unlikely, on past form, to last 10 years. And we would be better served by a more difficult but integrated system.”
Jackman also calls for a reduction in the power of shareholders at banks by making directors equally accountable to other stakeholders such as communities, customers, the wider economy and employees.
By forcing directors to serve a wider range of stakeholders Jackman says banks would produce better long-term strategies and distribute their profits more fairly.
Clayden Associates director Daniel Clayden says: “It is a bit soon to say the new regulator is doomed to failure. The reality is that part of regulation is about reacting to events as well as prevention.”