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Ex-Treasury ministers say it’s wrong to scrap FSA

Former Treasury insiders have criticised Chancellor George Osborne’s plans to scrap the FSA and replace it with a new regulatory structure.

Speaking at a panel session held by Lansons Public Affairs & Regulatory Consulting last week, Liberal Democrat peer and former Treasury spokesman Lord Oakeshott said the Government is wrong to break up the FSA in favour of the Prudential Regulation Authority and the Financial Conduct Authority.

He said: “The Bank of England should not carry out macro and micro regulation. Companies do not have to go through a restructuring process when they face problems and nor should that be the case for the regulator. “The answer to the problem of financial regulation is not just to set up new institutions but also to go through continuous learning.”

Former Labour Treasury minister Kitty Ussher agreed that restructuring the regulator is the wrong move. She said: “The changes to the FSA made by the current Government were politically driven and are a mistake.”

Ussher added that the Treasury is failing to involve itself enough with regulation at a European level. She said: “Regulation is a huge problem for Europe but the Treasury is consistently uninterested in engaging with the issue. The problem is such that there may even be an argument, as is often mooted in the Government, to move the issue of European financial services regulation to the Department for Business, Innovation & Skills.”

Lansons head of public affairs Mark Adams, who has also served as private secretary to Prime Ministers John Major and Tony Blair, said: “The Government would be wise to pay attention to the views of such an esteemed and diverse panel, particularly with regard to their criticism of the abolition of the FSA.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Exasperated me 16th June 2011 at 1:25 pm

    They need a carpet to sweep the acts or omissions under.

    As for the use of the term ‘esteemed’ I don’t think so.

  2. Scrap the FSA? last I heard they were alive and kicking ready to adopt their new name – FCA same old jobs same old people same old collective intellectual failure, bigger paypackets!

  3. Given that regulation of the banks under the last government is little more than a myth, if not a complete oxymoron, I think we can safely ignore any comments from anyone in the Labour camp in that direction. The FSA had neither the resources, the expertise or the political support to do the job. Basically, it was allocated a responsibility that it was constitutionally incapable of discharging and, on the few occasions that it tried to do so, was instructed by the Treasury to back off and look the other way (in the direction of IFA’s and insurance companies).

    As for scrapping the FSA, all that’s really going to happen is that it’ll carry on much as before under the banner of the FCA, with responsibility for regulation of the banks from now on mandated to a completely new organisation, to be called the PRA. Quite how the FSA being renamed the FCA, with the same people doing the same jobs at the same desks in the same office is going to cost £25m has as yet to be explained, let alone justified. Then again, since when did the FSA bother trying to justify anything?

    Just how many people working currently for the FSA are going to be transferring to the PRA? Precious few, I suspect. The FCA will be staffed principally by existing FSA people, whilst new people will be drafted in to staff the PRA.

    It would be less costly simply to leave the FSA as it is, subject to supervision by and accountability to an Independent Regulatory Oversight Committee, and to treat the PRA as what it will in fact be, namely a completely new entity.

  4. Ditto to what Julian has just written above.
    Golden Brun created the mess for political reasons which is the FSMA 2000 and the Coalition have been left to sort out that mess. Unfortunately I think they are just going to repeat similar messes by designing a totally new wheel, when the problem was the tires had not been pumped up and a gew spokes were missing. It may sometimes be cheaper to start again at the beginning, but I think with the FSA remodelling rather than replacing should be considerd first.
    A good example woudl be the old SA80 rifle which is still in sue now and we ALL complained like Bill-o when it replaced the SLR/FN of the 50’s to 80’s and yet it teh SA80 is still in service and I haven’t seen servicemen quoted as complaining about it for ages now. Is it because all the modifications finally got teh wepon to work right or is it simply that work parctices have adjusted to accept the problems with the equipment?
    Which should and can happen with the FSA?

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