View more on these topics

In other words

Alot has already been written in the trade media about last week’s FSA conference, particularly about some of the inflam-matory comments about brokers in the Council of Mortgage Lenders’ speech, but Association of Mortgage Intermediaries director general Chris Cummings responded with a very effective put-down.

A speech which has received rather less coverage is the one delivered a few days earlier by FSA chief executive Hector Sants to the Securities and Investment Institute.

He said: “Some management decisions have revealed a degree of incompetence and at times a rather cavalier approach regarding risk management. The necessary challenge was missing from governance structures, in particular, boards, and there may well be questions that can reasonably be asked about the openness and thus, arguably, the integrity of firms dealing with regulators, shareholders and their customers.”

What immediately struck me when reading these comments in Money Marketing last week, after the Telegraph revelations, was that, with a few words changed, how easily Sants could have been referring to the body which is responsible for deciding what he regulates and indeed the people he ultimately reports to.

In the light of its 30 per cent hike in fees for the current year, the FSA, unlike those it regulates, clearly sees no need to cut costs and so in the interests of being helpful and keeping down the cost of speechwriters, I have rewritten on a pro bono basis this part of Mr Sants’ speech, for use next time he is summoned before the Treasury select committee or indeed any other select committee.

“Some management decisions have revealed a degree of incompetence and at times a rather cavalier approach regarding risk management. The necessary challenge was missing from the relevant select committees and ministers, perhaps for fear of having a Nokia thrown at them next time, they were summoned to the No 10 bunker. There may well be questions that can reasonably be asked about the openness and thus, arguably, the integrity of MPs dealing with the Commons Fees Office, constituents and their taxpayers.”

After all major regulatory failures by politicians as well as the various bodies they appoint to regulate different aspects of our lives, the result is nearly always too much new regulation but not necessarily the right type.

At least Lord Turner has recognised that there is no need to rush out new mortgage regulation as the constraints on lenders are doing that job for him. However, we still need to make sure the FSA is fully aware of the implications of over- regulating, for example, by imposing loan to value or loan to income caps. There is a real danger that politicians who in general don’t understand the mortgage market will push the FSA into over-regulation.

One thing we can be pretty sure about is that the next regulatory failure will be caused by different reasons to the current one and that includes the next banking failure. This needs to be remembered when new regulations are being drawn up.

Ray Boulger is senior technical manager at John Charcol

Recommended

Advisers can rule corporate area

The rollout of personal accounts presents huge opportunities for advisers in the corporate sector to guide employers on qualifying schemes, says Scottish Life pension guru Steve Bee.

Global income: preparing for a rate rise…

In the five years since we launched the Artemis Global Income Fund, its manager Jacob de Tusch-Lec has built a distinctive portfolio that is first among its peers. Here he explains why his “quality, cyclical and value yield” stocks, and flexible approach, leave the fund better placed to benefit from uncertainty than funds that depend […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment