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Is regulator fit and proper?

Editor’s comment of the week

The Government is duty bound to make (another) attempt to restore the public’s faith in the UK banking system in the wake of the rate-rigging scandal. However, the reason for this enquiry – to investigate “transparency, conflicts of interest and the culture and professional standards of the financial services industry including the interaction with the criminal law” – troubles me.

Maintaining these standards is the job of the FSA, surely? Governing transparency, conflicts of interest, professional standards and criminal law are all basic tenets of the FSA. Regulators of any size are rarely congratulated for the good work they do, however, the FSA appears to have been remiss to not uncover the culture of lies and that has led to a scandal so soon after the UK tax payer bailout of 2008. Not even the Bank of England governor, Mervyn King, backs Mr Diamond as being ‘fit and proper’ – another FSA requirement for its approved people. Will the FSA fall under as much scrutiny as the banking sector?

Derek Bradley
ceo PanaceaIFA.co

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  1. The basis on which the FSA, like any other regulator, is supposed to conduct itself is set out clearly and unambiguously in the Statutory Code of Practice For Regulators ~ read it for yourself at http://www.berr.gov.uk/files/file45019.pdf. In fact, the document is called the Regulators’ Compliance Code.

    But compliance, as far as the FSA is concerned, appears to be a strictly one way street, something that the FSA imposes on others but patently isn’t minded to observe itself. Accordingly, it simply ignores the Code.

    The strangest thing of all is that no effort is made by anybody to enforce the Code, not even the TSC, despite the fact that the very person who wrote its foreward, Pat McFadden, is himself now a member of the TSC. Nowhere have I read any report of anyone on the TSC even mentioning the Code when grilling representatives of the FSA such as Hector Sants, Sheila Nicoll or even Adair Turner. Isn’t that very odd, not least at a time when the TSC is apparently doing its best to hold the FSA to account for its failings and for its misprioritisation of various issues?

    Whatever is the point of a Statutory Code when those who, by Law, are supposed to comply with it can simply act as if it doesn’t even exist?

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