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We need a regulator of the regulator

I read with incredulity that the Association of British Insurers is warning against major regulatory changes. Do these people live on the same planet as the rest of us? How can the ABI possibly consider the FSA is not in need of major structural changes?

The regulator sets its own agenda, with occasional interference from the Treasury, itself dictated to by the Government of the day. That is wrong, for a start, because it constitutes the injection of political influence into regulation.

The FSA sets its own levies and spends them in whatever manner it fancies, not least millions of pounds on hugely expensive outside consultancy exercises. That is wrong too, because the FSA is not subject to any sort of structure of fiscal responsibility.

What kind of regulatory structure is that? A healthy one? I hardly think so. Yet the ABI seems to think that major regulatory changes would be a “distraction”. A distraction from what – a better regulatory framework? Well, pardon me all to hell (as John Wayne would have said) for disagreeing.

The ABI goes on to say “it does not support excessive new regulation”. Oh really? Then just what does it consider the IFA sector to have been subjected to for the past decade?

What is needed – and I can barely believe this needs to be pointed out to the ABI – is a level playing field, on which regulatory resources are directed, not to mention charged for, in proportion to the scale of consumer risk.

On this basis, the IFA sector would warrant an allocation of 4 per cent of resources (this being the percentage of all complaints attributable to the IFA sector, and less still if you discount those orchestrated by the FSA’s hindsight review of mortgage-related endowments) while the banks…well, let’s see now. On the strength of the damage caused by their having been almost completely unregulated to date, probably 94 per cent.

The one thing the ABI have said with which I do agree and for which many voices have been calling in vain for years is a body to oversee the activities of the FSA – who regulates the regulator?

Julian Stevens

Harvest IFM, Bristol

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