Last week, the regulator turned down a Freedom of Information Act request made by Money Marketing to disclose information and research exchanged with the Treasury to help set the cap, arguing that it was against the public interest. It said that disclosure would inhibit the future free and frank exchange of views between the two bodies and would be “likely to inhibit the FSA in the effective conduct of its regulatory responsibilities and Government departments in the development of policy.” The regulator also acknowledged that making as much information as possible available encourages sound policymaking through public scrutiny of the arguments deployed. With Money Marketing now preparing a challenge against the decision, leading industry figures have expressed their support. Pinsent Masons head of strategic development, pensions Robin Ellison and Reynolds Porter Chamberlain senior solicitor Harriet Qui- ney are concerned that fail- ure to overturn the FSA’s dec- ision could set a danger- ous precedent for future transparency of the regula- tory regime. Ellison says the FSA’s argument for non-disclosure brings the Freedom of Information Act into question. He says, “Money Marketing has stirred the pot. The outcome of this appeal could set what the precedent for transparency will be. “If the FSA’s argument about disclosure impeding future free and frank exchange is legitimate, then you have to question what is the purpose of the Freedom of Information Act as the same argument will apply to all inter-government commu- nications which could all be frozen out of the public domain.” Quiney says: “If this decision is upheld, it has the potential to stop transparency in the future. There is a big risk that if the FSA takes a hard line at this stage, then it will continue to do so.” She believes there is some merit to the FSA’s argument and that transparency can stifle creativity in decision-making. But she adds that this argument hardly applies to deciding upon charging structures for savings products, and that “documents of interest” – facts and figures used to decide upon the 1 per cent cap – should be subject to public scrutiny. Some would say the FSA’s approach makes a mockery of its much vaunted bid for greater transparency. Ellison argues that no national security or personal security would appear to be involved here to justify non-disclosure. If the FSA contends that disclosure in this instance would impede the effective conduct of regulatory responsibilities, then surely it could use out the same argument when the industry asks it to justify non-disclosure of documents on any unpopular decision it makes in the future? Scottish Life head of communications Alasdair Buchanan says: “The FSA can say what they want the public to hear. They can say they are committed to share information but they also set the conditions for disclosure. Any- thing that they do not want to disclose they can bring out the same argument – that it will inhibit future free and frank exchange. It is a one-way street.” The FSA’s stance will also inevitably lead to one question that everyone is asking. Lowes Financial Management managing director Ian Lowes delicately puts it” “What the hell are they trying to hide?” Personal Finance Society public affairs director John Ellis says: “I can see why the FSA might find it convenient to use excuse about free and frank expression of ideas.” The rumour mill is working overtime on how the Treasury and the FSA arrived at the 1 per cent cap, with some sources suggesting consultants to the Treasury recommended a 1.5 per cent cap in the first place and 1 per cent was chosen as a round figure. Secrecy breeds mistrust. In this regard, the FSA is not doing itself any favours in its bid to win the confidence of the industry. Lowes says, “One of the FSA’s primary objectives should be to win the confidence of the financial services system but when they do something like this how can they expect is to have confidence in them.” Optima Financial manager Martin Card says, “You would expect them to justify why this decision was made. There are so many rumours about the 1 per cent cap and this would have been an easy way of quashing them.” Lowes and Martin are angered by what they see as double standards from the regulator while Land says. “This goes against the hard disclosure the FSA requires from IFAs.” Quiney points out that transparency at the FSA, which is an unelected, largely unaccountable body with sweeping powers, is of the utmost importance. She says: “If an MP does something mad, he can be booted out at the next election. This does not happen with the FSA so the FSA needs to be particularly careful with the way it conducts itself.” The Freedom of Information Act is a new weapon in the fight for open government. How the FSA resp- onds to this power now will set the agenda for openness for years to come.