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Regulation with benefit of hindsight

As Simon Burgess suggests in Money Marketing last week, we, like many other firms, are looking forward as 2007 kicks off, not least with our new name of Harvest IFM. Regrettably, as usual, the FSA is not. Despite Mr Burgess’ praise for the FSA in bashing as many firms as possible for having missold PPI, the same old question arises – what regulations in existence at the time of these misdemeanours are the perpetrators deemed to have breached?

To the best of my knowledge, the answer is none, because if there had been any regulations in place, then one may reasonably assume that only the most wantonly foolhardy businesses would have flagrantly ignored them.

Provided that people are properly informed by the regulator as to what is expected of them, then in view of the fact that their livelihoods may well depend on it, most will make every reasonable attempt to comply. So why is the financial services industry denied the basic and fundamental right to be told in advance what is expected of it? We do not even have any right of appeal.

If we complain that it is unreasonable to punish us for failing to comply with regulations or regulatory guidelines not even in existence at the time of our supposed crimes, the response from the FSA is that we should have anticipated what the view of the FSA would be at some future date with regard to how we run our businesses now.

John Tiner has said exactly this. We are expected to run our businesses along the lines of Utopian perfection without knowing what the FSA’s conception of Utopian perfection might be.

TCF may be a new name but in reality it is just more of the same old regulation by hindsight, only this time with a completely open mandate. Despite the FSA’s seemingly insatiable appetite for change, its basic modus operandi seems somehow never to do so.

Is this really in the best interests of either the industry or its customers? Of course it isn’t. Will we ever get fair and forward looking regulation? Don’t hold your breath.

Julian Stevens
Partner,
Harvest IFM, Bristol

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