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For better or worse

It was with sadness and incredulity that I sat down on a summer’s morning to begin reading the latest FSA update, annual report 2008/09. My heart sank as 124 pages downloaded before my eyes.

I wonder who at the FSA thinks I have the time to read all 124 pages, plus additional information,when I should be preparing for an office meeting, a client visit, looking at management information or the hundred other jobs a small business owner like me has to do to thrive and serve our clients?

But information overload is not my gripe. The problem I have is the tone of their covering email, which permeates throughout the report. They say, in their preamble on the general state of affairs last year, “Despite these challenges, we believe the FSA has responded and adapted well to events.”

I hate to say that is not quite how I see it and I suspect that I am not alone.

Now, I am sure the good people at FSA Towers are just like you and me, honest, hard working and do their best at all times. But given the impossible task of regulating something this big, they are on a hiding to nothing.

How about this for an idea? Scrap all regulation, as some people are calling for but keep pushing for higher adviser standards and consumer education, divert all the money we would have spent on the FSA into a compensation scheme, and let markets find their own way of regulating things.

Lo and behold, what have you got – a regime that has gone full circle, to a golden age where people were happy with financial services, and a pension and investments industry that we can be proud of, unencumbered by confidence-sapping bureaucracy and change.

Or how about a different view of our universe just for the sake of symmetry? What would the world look like today if nothing had changed when some bright spark first thought of a single regulator?

I have a nasty feeling it would look pretty much like it is now. I do not believe that any of the regulatory bodies would have predicted, let alone had the clout, to avert any of the recent financial disasters that have plagued the FSA.

It is impossible to know if an alternative would have been any better than the FSA. Getting rid of all regulation is never going to happen and scrapping the FSA and replacing it with something else will simply introduce another untried and untested regulator.

Instead of scrapping it, how about leaving it alone for just a bit longer, say 20 or 30 years? Despite its failings, I do not believe it is any better or worse than its predecessors. As we can see from the apparent madness in pension regulation, instability and change cause enormous problems. Let us give it the benefit of the doubt and encourage stability, reason and above all simplification from its corridors.

Tom Kean is director at Thameside

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