When the FSA first got its powers, it was all too easy to view the new, statutory watchdog as having fewer teeth and a more docile nature than its self-regulating predecessor the Securities and Investments Board.
After all, SIB had launched the biggest and most expensive compensation exercise ever attempted – the £15bn-plus review of personal pension misselling (even if it never intended it to be so big).
The FSA, by contrast, was resisting any sort of systemic review of the biggest problem to come up on its watch – endowment mortgages. Its critics accused it of seeing a vociferous personal finance press as its big difficulty rather than the industry it regulated.
Since John Tiner took over the FSA, critics must be finding it harder to support that view. Lately, the regulator has been baring its teeth. And, with its ultimate master the Treasury looking on, it is even taking the odd bite.
A quick list of confrontations – Standard Life, Legal & General and, most recently, the fund managers who ran split-capital trusts.
The FSA's recent breaking off of discussions with the split-capital trust industry is a case in point. On split-capital trusts, Mr Tiner was criticised by the Treasury select committee for failing at first to acknowledge that the FSA had been given a form of early warning about it. Long before it took decisive action, the FSA had received correspondence from another regulator in Guernsey which seemed to alert it to the problem of split-cap trusts investing too often in each other.
Since then, it is as if the FSA has been making up for lost time, seeking to restore its reputation in the very area where it was accused of being too slow. An initial investigation into split caps mildly asked questions about what was and was not said in promotional literature about the level of risk. Then last year there was a dramatic expansion of the investigation. Dozens of officials were put on the inquiry, thousands of hours of taped phone conversations were wheeled in to the FSA's offices in Canary Wharf.
We still do not know exactly what caused that to happen but evidently the suggestions that some fund managers might – or might not — have acted improperly were now being taken seriously.
The FSA reckoned it would cost at least £350m to pay fair compensation to the tens of thousands of investors who had lost money by investing in zero-dividend preference shares. The industry was only prepared to come up with £100m. Last month, after five months of toing and froing, the FSA lost patience and broke off negotiations.
This was a game of poker with no love lost on either side. In private briefings, the split-capital industry would like the media to believe that the FSA was overplaying its hand, that despite all that regulatory effort it has failed to find the necessary evidence of “collusion” of fund managers irresponsibly investing in each others' new trusts and thus stepping up the risks they were taking with shareholders' funds.
The FSA's willingness to negotiate for so long was, according to this version, a sign of weakness. And the industry was calling its bluff.
The FSA, precisely because of its statutory status, could not be so free with its off-the-record briefings. There could be other reasons – apart from failing to find sufficient evidence – for its sustained attempt to make a negotiated settlement work.
A negotiated settlement would, for example, free up a lot of resources which otherwise would have to be devoted to enforcing compliance – an expensive business, notable for the huge expense of paying lawyers to swap correspondence about whether or not there would be a judicial review. The split-cap drama reinforced the impression which came across so strongly from the FSA's confrontation with Standard Life.
No matter how much the insurance industry may have wished to dismiss this as part of the normal wrangling between regulator and industry, it was not that. Hardly ever does the regulator order an independent actuary to review the finances of one of its regulated members – something that is only necessary if it has lingering questions about the numbers. With Standard Life that it was it did.
Similarly, the public row between Legal & General and the FSA over endowments showed that the FSA was hardly giving ground to its regulated members in its routine private discussions.
No bureaucracy is perfect and the FSA has had its share of criticism. But in the political battle to prove its efficacy, it is at a constant disadvantage. Its statutory footing, and the legal rigmarole that goes with that, mean that it is hardly ever in a position to communicate its confrontations with the industry until they come to fruition in the shape of a fine.
We know that these are the products of months of negotiation (or at least, months of legal correspondence). But we can rarely get a balanced view of what goes on in those negotiations. Instead, we have to take an educated guess.
Andrew Verity is a financial correspondent at the BBC