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Hoban defends “democratic deficit” between Parliament and FSA

Treasury financial secretary Mark Hoban (pictured) has defended the “democratic deficit” that exists between Parliament and the FSA.

At a Treasury select committee today, committee member and Labour MP George Mudie asked Hoban whether he is worried with the suggestion that the regulator ignores Parliament and the financial services industry on regulatory issues. Mudie referenced the concerns raised in last night’s Parliamentary RDR debate

Mudie said: “At the end of the day, apart from making those statements in the house, it appears that the last word is with the regulator. Is nobody in the Treasury or the Government uncomfortable with this – what even the bankers call – democratic deficit?”

Hoban responded by saying the regulator is listening to the opinions of others on topics like RDR and MMR but, at the same time, stressed that it is important to have a regulator which is independent and can “get on with their job”.

He said: “I think that there is always a risk that their independence, credibility and authority is undermined if it is seen that they are becoming politicised. So I think you need to get that balance of scrutiny and accountability right, but also recognise that we should be setting up a framework for the regulators that leaves them to get on with their job.”

The committee members also asked if the Consumer Protection and Markets Authority would have a primary objective to promote competition. Hoban did not say the new regulator would have a specific remit to promote competition but stated it would ensure confidence in the markets and, therefore, competition would “flow” from that confidence.

Hoban also denied Bank of England governor Mervyn King would have too much power under the new regulatory set up. King will chair both the Financial Policy Committee and the Prudential Regulatory Authority, while keeping his role as governor of the BoE.

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Comments

There are 26 comments at the moment, we would love to hear your opinion too.

  1. Absolute power corrupts and the FSA has absolute power.

    The statutory protection of the FSA should be removed now. Once we can sue them for their errors, regulation will stand a small chance of becoming fairer.

  2. Not me guv – blame the regulator, local councils, opposition parties, A N Other.
    Delete as applicable.
    Governments pass the buck these days. Today it is health education which is now the responsibility of councils so they can get the blame for interfering in our lives. They all are as bad as one another.

  3. Yes, Mr Hoban, but the FSA isn’t independent of government in general and of the Treasury in particular ~ is it? This we know because the banks routinely use their muscle to ensure that the Treasury keeps the FSA off their backs, the result of which is that the FSA has to find something such as the RDR with which to carry on over-regulating the IFA sector and to make itself look busy. Meanwhile, the banks carry on much the same as ever and will doubtless manage to wriggle out of the RDR by adopting restricted adviser status. Is it any wonder, therefore, that the UK’s regulatory structure is widely perceived to be compromised and corrupt and is accordingly held in contempt?

    Competition doesn’t flow from confidence in markets, Mr Hoban ~ it flows from a level regulatory playing field, the denial of which seems to be something that you’re quite happy to endorse and to perpetuate.

  4. The FSA are an undemocratic, unaccountable, unelected quango with too much power.They are a law unto themselves with no concience re their actions and how they affect the lives of those they regulate. Parliament must take control of them before they cause any more damage.

  5. Incompetent Regulators Awards Team 30th November 2010 at 4:24 pm

    Hoban is in Turners pocket and is the front man in government for the corrupt F-Pack!

  6. Steven Farrall (Adviser Alliance) 30th November 2010 at 4:25 pm

    “I think that there is always a risk that their independence, credibility and authority is undermined if it is seen that they are becoming politicised. So I think you need to get that balance of scrutiny and accountability right, but also recognise that we should be setting up a framework for the regulators that leaves them to get on with their job That is utter fascism. Democracy is all about accountability. The very fact that the FSA is utterly unaccountable to Parliament is an affront to every person who cares about freedom. What next? A regulator for buying goceries? It is a bizarre and corrupt defence fo the undefendable. And God save us from experts. It’s they who got us into this mess. Thus is shameful and Hoban should be forced to resign.

  7. I would dearly like wikileaks to be able get hold of any and all the correspondence between Hoban, the FSA and the major banks. Maybe then we could see if there is any other reason he is acting so stupid.
    I always thought it was strange that grandfathering seemed to be a good possibility at one stage, but as soon as the proverbial hit the fan for the big banks in late 2008 the FSA immediately said no to it. Coincidence?

  8. Lord Leicester of Herne Hill QC advised that FSMA 2000 was in breach of the ECHR Act.
    In a recent communication Lord Leicester confirmed to me that this remains his view!
    Several lawyers have followed with the same view. The distinguished law lord, Lord Bingham, said recently that the “core of the existing principle [of the rule of law] is… that all persons and authorities within the state, whether public or private, should be bound by and entitled to the benefit of the laws publicly and prospectively promulgated and publicly administered in the courts”.

    The IFA is not equal before the law.

    Peter Hamilton barrister has said FSMA does not give the FSA power to ask an IFA to requalify and I’m sure there are many lawyers who would be happy to take up a JR.

  9. Mark Hoban stressed that it is important to have a regulator which is independent and can “get on with their job”. Just like the regulatory authorities did before the credit crunch Mark? For goodness sake let us have some accountability and responsibility shown here or let someone else do the job!

  10. Has he any commercial interests elsewhere or 2nd agenda?

  11. Whose opinions are the FSA and Mr Hoban listening too? The Banks? Its certainly not the IFA community. The people who will suffer the most with RDR and MMR are the common man and woman. It’s just stupid.

  12. Fair enough, so we can disband the Police Regulatory Bodies and let the police get on with putting people in jail, innocent or guilty – wouldn’t want their authority undermined would we; and why should we have a BoE – let the banks just get on with making money – wouldn’t want to undermine their credibility; and get rid of the MPs Expenses Committee, after all they’re all honest so we wouldn’t want to undermine their independence.
    Sorry, the last one’s a bad joke – MPs and independence don’t belong in the same sentence.
    Is there any evidence from Westminster that we live in a democracy or it is all just a mirage.

  13. The person with too much power would seem to be Mr Hoban.

    A regulator that has no “accountability” backed by a minister who protects and shields it from any “accountability” or questions is a recipe for disaster, as we sadly know too well.

  14. One has to question what an MP actually does these days.

    Laws and regulations from the EU ride roughshod over virtually every area of our lives with impotent MPs standing by. And even where there are remnants of us being able to control our own destiny, quangos like the FSA are virtually uncontrollable and unaccountable to Parliament.

    And yet there are some people living in the UK who still believe we live in a democracy – what a sick joke.

  15. HM Treasury hands down policy to the FSA for implementation, it therefore follows that the regulator is NOT independent and never has been, the RDR was a HMT initiative under New Labour, as is the MMR.

    Until the regulator is truly independent of politics we will never have effective regulation.

  16. Is this the same FSA, who were called ‘not fit for purpose’ by the Conservatives in 2009, when they were in opposition?

  17. Does no-one else notice that the people that would be pilloried for a misselling scandal (Govt and regulators) want the RDR, while the unaccountables (backbench MPs) go for the populist bandwagon?

    The problem is and always has been that IFAs refuse to take pride in their profession by rooting out the cowboys. If travel agents and builders can club together to try and weed out the rotten minority, what stops IFAs?

  18. In a nutshell we are regulated by overpaid parasites who are fools—fact.

  19. Hoban Schmoban…What a thought..Wikileaks gets hold of the evidence we all know exists.

    I told everyone there HAD to be a good reason why Mr Sants was kept on the inside within the FSA & the new CPMA regulatory framework by the new coalition. Didn’t he send an email to all his employees the day of the last election prompting them all to vote Labour & not put in those nasty men who were going to abolish his empire??!!……Hey presto though just when you thought we could all wave ta ta…he’s promoted!

    Which begs the question….WHY?!!! What does he know that makes him so valuable to keep onside?!!!

    And just why is Mr Hoban so keen to keep the FSA & RDR in tact, despite cross party concerns regarding it’s implementation. Arrogance breeds contempt & someone somewhere with an eye for revenge will spill the beans sooner or later.

    It might take a while but the truth always outs in the end…like my Mum always says..”What comes around…goes around”..so all will be revealed…just like the MPs expenses debacle.

  20. They have been kept on because of their prudential management and good judgement calls. They are the best qualified and experienced leading the worlds premier and outstanding regulator.
    I am quite sure there is no other reason. As Mr Osborne keeps saying they are all in this together.

  21. Andy asks at 4.43 Has he (Hoban) commercial interests elsewhere or 2nd agenda?

    From my point of view I would say this,so called democratically elected political perties have to go through a process off wooing voters,then a vote to get into power.Even then this power only stays with those elected until the end of that parliament,where they have to re-woo voters,or face being thrown out of a job,and power.

    An unelected quango,with no accountability to anyone,and seemingly endless powers,needs not woo anyone,but puts out rhetoric that those regulated by it should be in fear of it.It also has no fixed term in power,and can’t be unelected,if its name should change its role will stay the same,and thus still be the same beast,but with a different name.Unelected quangos also pay more too.Doesnt Turner get £433,000.00 a year for a 3 day week? whilst Cameron (Prime minister) get £142,500.00 for silly hours?

    Summing up,if I were a politician,especially in a fragile coalition government,working within finance I would have one eye one my future and the other eye wondering what benefits were to me by opposing my future employer?

    Call me a sceptic,but anyone else got something better?

  22. So let me see if I’ve got this right.
    Parliament is an elected body by the people, for the people, and (to a degree) we can vote them out if we don’t like what they are doing.
    The FSA is an unelected Parliament for the IFA community, setting us aside to be governed by a dictatorship, which has no accountability and over whom we have no influence.
    So much for living in a democracy. We are an isolated small community of hard working people whon the government has seen fit to single out for “special treatment”.

    Does anyone else think it odd that outside our own press bodies there has been no national coverage of these issues. The FSA has ensured that our clients are kept totally in the dark as to what is happening and how it will affect them. Consultation my &$$.

    We all know what a farce this is, so does the government but they seem to abdicate all responsability to this quasi regulator who’s true mission it seems is to make as many of us “redundant” as possible and send clients to the banks, who as we know can be totally trusted with finances cant they.

    What a joke, only no one’s laughing!!!

  23. It is not possible to defend the indefensible.
    Democratic deficit is totally indefensible.

  24. Incredible that a government employee does not agree with democracy, especially when holding such a high and important position.

    A similar discussion is being held surrounding the Police force and no way are they getting the same free reign.

    The FSA also appears from the outside to have been influenced somehow which is another concern. Even MPs were wondering what was going on based on the facts they had in their possession.

    Personally I would like to see Garnier and Baldwin offered positions as well as the FSA accountable as they appear to have a reasonable handle on the real world as well as this industry.

  25. And there was me thinking that human rights trumped everything! I watched the debate and when every speaker had finished was feeling quietly optimistic that a lot of common sense had been spoken. The Government’s response must have been prepared earlier that day as it didn’t address any of the many valid points raised. Shame on them.

  26. McHobans definition of independence 3rd December 2010 at 3:40 pm

    HOWS THIS FOR INDEPENDENCE
    MC HOBAN?

    Treasury appoints FSA board.

    FSA implements RDR and all fees are thereafter charged 20% VAT

    Passing right back to the Treasury

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