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FSA’s time is up

In the late 1980s, I was part of the consultative group approached by Francis Maude to supposedly ascertain views of senior members of the financial services industry.

It was, of course, as with all governments, not a consultative process at all but another diktat by politicians spooked by the latest consumer scare.

In this case, it was the Barlow Clowes’ debacle. For those who do not remember, it was where a Gibraltar-based company ripped off the gullible in a fraudulent scam.

I tried to explain to Maude that it was not possible to regulate for criminal activity or stupidity. As soon as I cottoned on to the fact he was not consulting but dictating, I left the group and forbade any use of my or my company’s name. Needless to say, a prescriptive box-ticking rulebook appeared backed by Draconian legislation.

We now have an institution which has failed on a scale unimaginable even to those of us who knew it was doomed from the start.

It makes up its own rules, applies them retrospectively, decides on its own scale of fines, has no proper appeal process and then pops the fine in its own institutional pocket.

Almost none of the staff are properly qualified or experienced, the salaries at the top are mind-boggling and the head honcho is usually there by favour of Downing Street.

It has failed completely yet no one has been made to walk the plank and no serious reform is contemplated. In fact, worse, more of the same seems to be the order of the day. Since this failed system of regulation, we have seen all sorts of failures – Equitable Life, NPI, split caps, missold pensions and a banking collapse.

Political and media pundits argue that there is not enough regulation. No, we need fewer regulations, the return of sensible caveat emptor and an acceptance that financial services is not an exact science.

We need a more educated customer base and a better-informed media. The housing and banking crash was obvious to me and many like me but came as a complete surprise to most journalists. Let us close down the FSA as we closed down Maff. Not to replace it with an equally incompetent Defra but a new regime.

Let us return to common and statute law world respected for hundreds of years, with the dissolution of quangos and the jobs- worth mentality that goes with it. No more double regulation. If the product is regulated, does there need to be another layer?

IFAs with significantly fewer complaints and mistakes than the banks are bearing far too much of the burden. A strengthened Ombudsman with more resources for dispute settle-ment is needed, as is recourse in costs for vexatious or fraudulent complaints. The current system is a black-mailer’s charter. Unless these issues are addressed, half the industry will go abroad and the other half will simply disappear.

Godfrey Bloom is a Ukip MEP and former IFA

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