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FSA directors scoop the rewards of failure

The FSA has sought to make the principals of financial services companies personally liable for the financial consequences of regulatory failures on the part of those companies. By the same token, should not the directors of the FSA be held accountable for the financial consequences of the FSA’s failure to regulate? Most right thinking people would consider that they certainly should be.

This brings us to Clive Briault, director in charge of the FSA department that was supposed to have been in charge of regulating the banks in general and Northern Rock in particular.

The financial impact on the national economy of his department’s failure to discharge its regulatory responsibilities properly and effectively must surely dwarf the financial damage caused by a few firms that were a bit sloppy about how they ran sales campaigns for structured products or which failed to give the highest priority to dealing with FSA-orchestrated complaints about low-cost endowments.

The results of the FSA’s failure to do its job properly are probably hundreds, if not thousands, of times greater than those of a few errant financial services firms.

What was Mr Briault’s punishment? The biggest remuneration package for the year of anyone who works at the FSA. Additionally, all the other directors awarded themselves handsome bonuses and salary increases, not least Mr Briault’s boss, Hector Sants.

When challenged about this at its recent annual public meeting, an event at which members of the public are supposed to be able to ask questions of the FSA in open forum, the FSA simply refused to answer.

All that was offered was a feeble undertaking to do better in the future, with the caveat that to do so would cost even more than the FSA already charges the industry.

What seems to be happening is that the more the FSA fails to do its job, the more its directors pay themselves and the more the FSA charges in levies.

This places even greater burdens on an industry trying ever less adequately to maintain remotely satisfactory levels of service to the very public whose interests the FSA is supposed to be protecting.

Plus, of course, it is unavoidable that these ever increasing costs of increasingly inept regulation have to be passed on to the public. Is there not something terribly wrong here?

Julian Stevens

Harvest IFM,

Bristol

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