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IFA view: The cost of learning

The FSA does not seem to recognise the extent of its failure

There is an excellent film called A Few Good Men with Jack Nicholson playing the part of Colonel Jessep, a bullet-spitting US Marine, and Tom Cruise playing the part of Lieutenant Kaffee a junior defence attorney in the Navy.

The film revolves around a “code red”, an illegal form of internal discipline that resulted in the death of a US Marine, which had been sanctioned and then covered up by Jessep. With the evidence destroyed, tracks covered and a dubious code of honour, it looked as though Kaffee was going to lose the case with the result the two Marines that carried out the fatal punishment would go to prison while Jessep remained free.

In a wonderful piece of courtroom drama, we see Lt Kaffee finally corner his man and Jessep admit it was he who ordered the code red and is thus brought to justice.

I was reminded of the film following an exchange I witnessed at a lunch last November. Sally Dewar, managing director of the risk business unit of the FSA, gave a speech and talked about several things, including how the FSA were working better with the advisory sector. It was a professional though predictable presentation that was not going to set the world alight. But the insights came during the questions she took from the audience.

When asked whether the FSA had dropped the ball with regard to regulating the banks in light of the credit crunch and economic meltdown,
she replied that the situation had been a learning experience.

A learning experience! What is that supposed to mean? Is it political speak meaning “we are really and truly sorry, we didn’t know what we were doing but we cannot really admit it” or was this their Colonel Jessep moment – except they do not get brought to justice.

To describe it as a learning experience is insulting to all who have seen their incomes fall, their businesses and clients’ portfolios suffer, colleagues losing jobs, the lack of bonuses and the list goes on. It is beyond arrogance that the scope of their failure can be reduced to
something as trite as a learning experience. That is one hell of an education bill.

The Government has already spent £117bn propping up financial institutions. Yet even this is dwarfed by the estimated £850bn that the taxpayer is on the hook for.

I do not agree with Chris Cummings when he says the FSA have changed their attitude, this slip of the tongue convinced me otherwise. There needs to be a regime change but the present Government does not have the stomach for it.

Dennis Hall is managing director of Yellowtail Financial Planning


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Having met Hector who pointed me in the direction of the supervision team I can see why he thought I could help them, even if they initially agreed but ‘upon reflection, though it was too ‘complex’.

    The amount of time spent on the RDR while the financial system was falling part is truly bizarre, surreal, raises eyebrows everywhere yet all we get is Hector saying it was ‘interesting’.

    Hector said he couldn’t force his director to do what he felt was right, he is the CEO, is that unfathomable?

  2. Incompetent Regulators Awards Team 19th January 2010 at 10:23 am

    Dear old Hector is mislead by his senior staff, hence he is distant from reality. What’s new in these types of jobs. He should have watched Gerry Robinson’s NHS series last year when he made the chief exec of a hospital roll his sleeves up and go and talk to his front line staff re NHS failings.

    Hector (as you call him Evan) needs to roll his sleeves up and get into the real world and then kick *ss from the top down as all they are doing is securing their pathetic little overpaid jobs.

    Pigs may fly yet!

  3. Never mind Dennis
    At least lessons will have been learned going forward leading to better outcomes!

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