Barack Obama has previously said: “change will not come if we wait for some other person or some other time. We are the ones we’ve been waiting for. We are the change that we seek.”
I ask you, are the Consumer Protection Agency and the Bank of England (the suggested replacements for the FSA) the ones we have been waiting for? If you speak to Shadow Treasury minister Mark Hoban, he certainly thinks so. Should the Conservatives lead the country they have committed to making “rapid progress” on the shake-up of regulation in their first year of power?
The Bank of England is expected to take over the regulation of systemically important firms, particularly those that are large deposittaking institutions. It will also take over the FSA’s macro-economic responsibilities while the other financial services companies and intermediaries will be regulated by the CPA. The Conservatives want their proposals for regulation to start a debate and to enable them to enact rapid change with what they believe will be the least amount of disruption.
What do they expect to happen? Simply a shiny new name badge on the front door of the FSA North Colonnade Canary Wharf building and the central bank’s Threadneedle Street building?
Every piece of financial services marketing will need to be thrown away or amended, and new rule books will need to written to split the regul-atory responsibilities between the Bank of England and the CPA. Many businesses come under both regulators and the risk of differing conduct of businesses rules being slightly different in their application is high. These changes will cost millions of pounds which will, indirectly, need to be paid by the consumer.
Please understand me, I’m not saying that the FSA is perfect, the opposite in fact, but it does feel that we may be throwing the baby out with the bath water. The quality senior FSA professionals, like John Tiner and Hector Sants, have already jumped ship to presumably benefit from rich rewards the City can offer and it is unlikely that they will return. It is expected that the CPA will be up and running in the first Conservative parlia-ment and that the complete change over will not happen until a second parliament.
I do agree with one thing Hoban has said when speaking to the Financial Times: “We want to move away from a situation where the FSA is cleaning up the mess after it happens which will require a more intrusive approach.”
The FSA has grown to one of the City’s largest employers and if it recruited more industry people who really understand products and are able to foresee future regulatory breaches, it could still create the confidence that an effective regulatory structure is in place in the UK.
I’m old enough to have been regulated under Fimbra, Lautro and the PIA and, to be honest, changing from one to the other simply costs money and time in literature changes.
As the industry staggers out of the longest UK down-turn on record, is this just an example of playing politics?
Kim North (kim@techandtech) is director of Technology & Technical