The FSA certainly brought it on itself with its over-zealous application of its authority in the early years of its existence.
I was one of the few journalists to have a real pop at it. “It has snatched away our birthright of being innocent until proved guilty … and it is time we got angry,” I wrote in Money Marketing in 1998 in the middle of the disgraceful hounding of IFAs during the so-called pension misselling scandal.
Compensation was being doled out to complainants many years before it was even known that they had suffered any loss and with no provision for redress if the FSA’s projections were seen to have been wrong.
“Mr Bridgland is quite right,” howled an obviously nervous name and address supplied a couple of weeks later. “When we had a review visit, it felt like a visit from the SAS.”
He was not alone. The very mention of the FSA was soon enough to strike dread into the hearts of thousands of those under its eagle eye.
A new species of mankind evolved – the compliance officer. These creatures were employed by the subjects of the FSA to assist them in complying with the voluminous instructions which spewed forth with startling regularity from Canary Wharf.
The species contained a sizeable proportion of the sub-species Homo jobsworthanus, a nervous strain which was often seen clutching a clipboard and applying rules with obsequious vigour.
If the shadow of your firm’s Homo jobsworthanus fell across your desk, it was a fair bet that you were in for a right going over.
All this sort of atmosphere did nothing to enhance the reputation of the FSA as a soppy bunch of do-gooders who help old ladies cross the road. Quite the contrary.
The financial community began to think of Canary Wharf as somewhere akin to the Bastille. Tales about the FSA, whispered furtively in City pubs at lunchtime, were rife. Many were apocryphal and over the top. I have space for only a handful of examples.
First, the anti-moneylaundering precautions. It is not the FSA which sets the rules on this but the joint money laundering steering group. However, the rules caused much consternation when they were enacted in the late 1990s. Insurance companies and banks tended to blame the FSA when explaining to flustered customers the need for such a welter of identification but the steering group had only asked for a passport or photo driving licence. Or just an old-style driving licence plus a council tax letterThe FSA made life offices sell all their equities. This was in early 2004 when 18bn worth of equities were quickly offloaded by life offices, of which 7.5bn came from Standard Life. Beautiful timing at a point when the FTSE was in the doldrums. This was just before it picked up again, too. Then it was too late and with-profits has never been the same since.
It smelt of Gordon Brown, flogger of our gold at a silly price. The FSA had done nothing of the sort, of course. It had merely urged life offices to consider whether they were overweight in equities and, if so, to adjust their portfolios.
The headline on a Scottish Provident circular to IFAs last autumn read: “Important – we are contracting our customers back into the state second pension.” Accompanying it was an explanatory FSA leaflet.
Much was made of the Government’s decision to reduce rebates, although it was soothingly implied that you could trust the Government more than by “risking it” in the private sector. Yes, seriously. The advantages of staying out of S2P – earlier retirement options, benefits for spouses, cash commutation – were mentioned, but only just.
When one IFA was asked why he had contracted so many people back in by way of an inertia deal, he said: “Well, I had to. I was told that I would be non-compliant otherwise.” Presumably by a Homo jobsworthanus.
The FSA had said nothing like that, of course. It had merely urged IFAs to look closely at each client’s position and advise them accordingly.
An FSA spokesman said: “Compliance officers should try to ensure that the procedures they are applying are not overdone or super-equivalent to the actual FSA requirements. We are very happy to help firms and their compliance officers achieve this.”
So there you have it. Next time you feel your Homo jobsworthanus is over-egging the pudding, give your friendly FSA a ring. It will soon sort fact from fiction.