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Just the job for Kenmir/Don’t throw Crosby out with the bath water

I think I have found an excellent way for Mr David Kenmir to occupy his mind, and his time, when he moves on from the FSA in the next couple of months.

He should get himself a little non-exec role with an IFA, perhaps on a newish model, with say around 26 advisers.

I just can’t help thinking this could prove beneficial for both parties.

First why would Kenmir be so good? He is a senior regulator, who has demonstrated that he can be tough but also flexible in finding solutions. He is personable and well connected, indeed he is one of the more human of his kind when most advisers regard regulators as more akin to sinister space lizards than people. He comes across as someone who sets great store by trying to do the right thing and striking a balance between personal ambition, getting the job done and guarding against unforeseen consequences. He hasn’t always succeeded, but I would agree with his own analysis that the flexibility shown during the PI crisis is to his credit. Where he was tough, say over phoenixing, then it was not just the FSA interest he was serving, it was in the interests of the whole of the industry.

So to my mind, he would make an excellent non-executive, even if he ended up in an IFA that might otherwise wish the FSA would go to Hades in a handcart.

So why would it help Kenmir? He would get the chance to see his handiwork in practice, and how firms that are changing model are coping. He could perhaps report back informally – with the IFA’s blessing, to his erstwhile colleagues, say Dan Waters and his team.

He might even receive other more lucrative offers from big providers who wouldn’t just get insight into the way regulators work, but and the bonus of someone who could see the problems confronting distributors too.

This might be just as well, because here is the rub. The non-exec role at this IFA probably wouldn’t pay much for the next few years. They would not have much spare cash. And in that, might be the most valuable insight of all.

Much worse than the PI crisis, he might get to see first hand how the regulatory burden from capital adequacy, the strict RDR timetable, and combined fee hikes for the FSA, FSCS and ombudsman risks driving firms into the ground or into firesales. That might just make him pause for thought and even convince his colleagues to do so too…

Don’t throw Crosby’s report out with the bath water.

Even the folk at the league against cruel sports may be allowing themselves a little smirk at the new national sport of bank chief baiting.

But I don’t care for the spectacle, if it stops the industry, Government and regulators from getting answers about what can be done to put things right in future. Sir James Crosby’s report into mortgage funding, made much sense and has been incorporated into the five point plan for the mortgage market last month.
The question for ministers is whether Crosby’s recommendations can be separated from the radioactivity that attaches to anything written by a former bank chief.

It is clear that the Tories are using Gordon Brown’s association with Crosby to slam the PM and question his judgment further. But proposals for a return to decent though not unrealistic levels of lending due to increased mortgage supply, including, in some measure, wholesale funding and securitised lending, are worth implementing. That doesn’t mean banks shouldn’t hold more capital, that loans of more than 100 per cent should make a comeback or that funding models should return to the worst excesses of 2006 and 2007.

But amidst all this recrimination, satisfying as it is for a time, we need to start dragging ourselves out of this hole, and if Crosby’s suggestions help to do this, then it shouldn’t be dumped in the trash along with the various bank chiefs’ reputations. Slam Brown for many mistakes, by all means, but it would be good if the Tories avoid attacking him when he tries to find solutions, whatever the source of the recommendation. If anything Brown should be criticised for being too slow to embrace Crosby, in this instance at least. And if his name is detached from the recommendations, I’m sure Crosby won’t get too sentimental about that.

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