Martin Wheatley, the new Chief Executive of the Financial Conduct Authority (the successor to the Financial Services Authority) said this week that
“People who believe watchdogs are already too tough have a big wake-up call coming. We have barely got started.”
The first question is, who are “we?” Staff turnover is an ongoing problem. Mr. Wheatley himself was rushed in after following the shock resignation of Hector Sants (which followed the shock resignation of Margaret Cole). The regulator’s process are getting slower and more protracted as the protected staff follow their leader’s dictate and act like enforcers rather than as a cog in the system.
Secondly, the draconian regulatory systems being introduced are written by individuals with little practical market experience and thus simply fail to add to the efficiency of the City.
However, yet again, Andrew Tyrie MP, the chairman of the Treasury Select Committee, has savaged the approach of the regulator. He said this week that
“there is a failed culture of box ticking.”
This comment was included in the Committee’s report on the collapse of the Royal Bank of Scotland which said that
“the FSA could have and should have intervened in the takeover of ABN Amro.”
The present processes of the regulator are entirely of a box-ticking mentality. They do not give advice to their members (who pay the annual £500m costs). Any request will be met by an instruction to ask your legal advisers.
Figures to be published this week suggest that a slow economic recovery is beginning. As stock markets begin to prosper again the crooks will come out of their Mediterranean mansions, tick the boxes, and start all over again causing mayhem with the private investor markets.
And the regulator will carry on checking that the boxes are being ticked.