Is the process supposed to operate across the board and be proportionate to the risks involved? Or is it the process that other contributors have correctly identified as the FSA being the protector of the banks and the non-accountable arm of the Government/Treasury?
The tripartite system foisted on us has no clear line of responsibility and nowhere is this more apparent than at the FSA where there is a conflict of interests at the core.
On the one hand, the FSA is there to regulate the markets and the financial institutions that use and make up those markets and on the other it is there to protect clients/customers/consumers. These two objectives are incompatible.
When banks failed, the FSA’s response was their processes and systems were not effective and not up to the job. Nobody was to blame because nobody was at fault, it was just the system. Eventually, an apology was grudgingly made but only because the FSA wanted to move on from the debacle, not because it had any intention of cleaning out the stables.
The FSA still believes it has a system in place when all outside the FSA can see they do not, at least not one that the FSA is prepared to operate properly and that is sufficient for the job.