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Repeated failures to rein in banks

Margaret Cole, director of enforcement at the FSA, is quoted as having said: “Taking action against Winterflood shows the FSA is determined to tackle abusive behaviour and to deter market participants from threatening the integrity of markets.”

So has not the FSA allowed an almost total collapse of confidence in the integrity of the banking sector by its virtually total failure to regulate it? Yes. it has.

Ms Cole goes on to say: “The FSA expects market professionals to always be alert to obvious indications of wrongdoing. There were clear warning signs that should have made Winterflood think something was amiss but it failed to recognise and react to them.”

Errr…is this not exactly what the FSA is guilty of with regard to what the banks were doing, not to mention reckless mortgage lending practices and fraudulent mortgage broking practices?

Were there not clear warning signs that should have made the FSA think something was amiss but which it failed dismally to recognise and react to? Yes, there were.

“Instead of challenging the trades,” Ms. Cole goes on, “Winterflood allowed them to go ahead and made large profits as a result. Winterflood’s failure to properly carry out its duties as an authorised market maker led to serious losses for investors and damaged confidence in the market.”

As did the FSA’s repeated failures not only to challenge what the banks were up to but also its repeated refusal to take any note of what it was being told by other people.

Meanwhile, the banks continued to make huge profits and pay huge bonuses to their directors and staff while a volcano was brewing beneath their very feet. And the FSA did nothing. How does the FSA continue to get away with it? It simply beggars belief.

Julian Stevens

Harvest IFM, Bristol

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