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MPs urge new regulator to avoid FSA's 'failures'

by Daniel Grote on Jan 18, 2013 at 07:56

MPs urge new regulator to avoid FSA's 'failures'

The Treasury Committee has urged Financial Conduct Authority (FCA) chairman John Griffith-Jones to ensure the new regulator does not repeat the failures of the Financial Services Authority (FSA).

In a report on the appointment of Griffith-Jones as chairman of the FCA, the committee said he needed to 'restore the credibility of the conduct regulator', arguing the FSA had 'left consumers exposed to some of the worst scandals in financial history'.

'It created a "box-ticking" culture whose benefits were far from evident and which still failed to pick up major failures in the making. We will expect Griffith-Jones and his board to ensure that the new organisation adopts a radically different approach,' it said.

The committee added that Griffith-Jones and his board colleagues would need to 'demonstrate stronger strategic leadership', claiming that the FSA board had 'appeared to fail in its oversight' of the regulator's work.

Treasury Committee chairman Andrew Tyrie (pictured), added: '[The FCA] is taking over from a body, the FSA, which failed consumers badly. If the FCA simply picks up where the FSA left off, consumers will suffer again.'

34 comments so far. Why not have your say?

TheFuture

Jan 18, 2013 at 08:04

Candidly, the closing quotation is deeply sad.

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Chris Wicks CFP

Jan 18, 2013 at 08:15

A couple of thoughts:

The omens are not good for change. Its just the same old people working out of the same old ivory tower playing games with people's livelihoods whilst allowing banks and insurance companies to run roughshod over consumers interests. There is absolutely no chance of a radical change of approach. Just more of the macho after the event posturing and credit claiming.

If the previous regulator was so bad, why was the outgoing chairman knighted??

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Sovereign

Jan 18, 2013 at 08:31

Griffith-Jones and his board colleagues would need to 'demonstrate stronger strategic leadership', claiming that the FSA board had 'appeared to fail in its oversight' of the regulator's work.

'[The FCA] is taking over from a body, the FSA, which failed consumers badly. If the FCA simply picks up where the FSA left off, consumers will suffer again.'

However lets give the recently departed leader of this shamefully incompetent regulator a Knighthood!!

What a complete farce!!

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Mark Cooper

Jan 18, 2013 at 08:47

Chris Wicks beat me too it. They just knighted the architect of this abject failure.

Looking at 1,700 % APR Loan Sharks sponsoring prime-time TV and Premier League football clubs nothing appears to have changed. Give it a couple of years when they've woken up and the lenders folded they will conduct the "compensation" scheme - paid by the taxpayers, naturally.

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Adam Grant

Jan 18, 2013 at 08:51

Dear Mr Tyrie, as you appear to be the only MP with an ounce of common sense, perhaps YOU can explain why Knighthoods are awarded for such abject failure,...?!

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complacency rules

Jan 18, 2013 at 08:56

Re Adam's comment. I do not recall seeing anywhere that Mr Tyrie or the Select Committee have raised objections to the Knighthood.

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michael bates

Jan 18, 2013 at 09:30

Will Mr Tyrie and the TSC now please add their weight to the cancellation of HS's knighthood which has made them and the Government a laughing stock to the consumer and lost overtly more credibility for the financial services industry than any of the failings to which he refers? Sants seems to have tarnished the careers of all of those who worked hard, helpfully and diligently at the FS

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michael bates

Jan 18, 2013 at 09:31

.....diligently at the FSA.

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Man of Kent

Jan 18, 2013 at 09:44

"We will expect Griffith-Jones and his board to ensure that the new organisation adopts a radically different approach". That would be action rather than inertia, then.

I don't expect the FCA to repeat the FSA's failures. I confidently predict they will come up with a whole new range of failures to call their own.

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abtfinman

Jan 18, 2013 at 09:49

Hope you have all signed the petition @

http://www.avaaz.org/en/petition/Withdraw_Hector_Sants_Nomination_for_Knighthood_Reform_The_System/?wRLlPdb

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Richard Anderson

Jan 18, 2013 at 10:02

From what I can see Andrew Tyrie has a pretty good grasp of what is needed. He identifies the FSA's various shortcomings, and has his finger on the pulse. He also seems to be just about the only politician to try to call them to account. If I had a vote I'd put him in charge !

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Julian Stevens

Jan 18, 2013 at 10:03

Such generalised, mealy-mouthed platitudes are all very well, but what's really needed is a specific agenda for real and fundamental reform, as set out in my two posts on what I would do if I were in charge of the FSA for a day. The starting point must surely be compliance with the Statutory Code of Practice For Regulators, rigorously enforced without fear or favour, with appropriately tough sanctions for non-compliance. Yet again, it all points to the need for an Independent Regulatory Oversight Committee with the unassailable authority to say to the regulator This is wrong and you aren't going to do it or You were instructed to do X, Y and Z ~ why haven't you done it? Anything less is just pussy-footing around the problems without actually tackling them.

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Simon Mansell

Jan 18, 2013 at 10:20

Avoidance suggests that regulators have alternatives. This is akin to suggesting a train has an alternative to the single track it runs on! The regulator represents government without accountability or electoral mandate - in other words dictatorship, the same dictatorship that hands democratic powers to unelected European bureaucrats.

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Hickky

Jan 18, 2013 at 10:24

Andrew Tyrie (or Andy tiresome as he is often refered to by his other MPs) is one of the good guys. But I don't think the TSC has any influence on Knighthoods and it is unfair to blame them. The deal on HS's kt was probably done by the labour government years ago.

Griffith-Jones is the chairman, the job vacated by Lord Turner, so judging by the incompetence he has shown, three days will be more than enough to double the output from the chairmans office.

But why oh why appoint a minted chairman from KPMG as the chairman. A huge orginisation entirely devoted to reducing government income from taxation via filling in forms, ticking boxes and not taking blame for mis-reporting on accounts they certified. Does this type of firm provide the background of ethics, honesty and fairness that the new role demands.

If it were down to me to appoint a chairman, I would refuse any lawyer, accountant, banker, civil servant, fund manager, insurance officer or advisery firm with more than three offices. Anybody got other suggestions?

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Lyndon Edwards

Jan 18, 2013 at 10:26

The first thing to arrange is that the FCA is actually accountable to someone (a tribunal?) with powers to punish/remove or otherwise call to account those in the FCA who fall down on the job. No supervisory body should ever again be given unlimited powers like the FSA has.

There should also be a lay body that advisers and others can appeal to,made up of practising financial advisers and others in financial services with authority to refer bad regulatory decisions to this tribunal. They could be appointed on a rotating 24 month basis.

Never, ever, again must there be a kangaroo court like we have seen in the past.

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Jonathan Kirby

Jan 18, 2013 at 11:57

If government in the form of the TSC can see the problems yet do little more than say 'pretty please' don't cock it up again, what kind of a monster is being created with the FCA?

My fear is that government in the form of Gordon Brown deliberately created the FSA to be unaccountable as they feared being blamed if the buck stopped with them and that the FCA will be the same.

This is far too important for such lily livered tactics.

The country & the industry needs the government to be in control and treat regulation as if they were spending their own money not 'other peoples' i.e. ours.

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Compliance Officer

Jan 18, 2013 at 12:00

That petition is about as well written as a West Afrian 419 scam letter. Not credible.

", the politicians, bankers and regulators who have failed to over a period of 30+ years"

"Reforming the systems to prevent reward for failing the people this happening again must be next"

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John Whipple

Jan 18, 2013 at 14:02

abtfinman - Not even 2,000 people could be bothered to register disatistfaction with H Sants knighthood.

They really are laughing ......Sants is certainly laughing all the way to the bank.

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abtfinman

Jan 18, 2013 at 14:14

Agree with you John. Needs to reach a much wider audience. Still we have tried.

Compliance Officer

To be pedantic it's the reasoning that is badly written, not the petiton itself. Seems to me you have an interest in keepnig the existing corrupt regime. When I started in this business your job title did not exist.

I am now officially a non IFA.

30 years of work gone. Not sure how I feel about it.

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Julian Stevens

Jan 18, 2013 at 14:21

You can check out any time you want, but you can never leave.......

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Compliance Officer

Jan 18, 2013 at 14:40

No abtfinman, many aspects of the current system frustrate me enormously. My jobtitle does not automatically make me an apologist for the system

I would however say that a petition is utterly pointless which I imagine is why so few people have bothered with it and one that startes off with a pre-amble of that quality doesn't help.

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Man of Kent

Jan 18, 2013 at 14:48

@ abtfinman - when you started in this business, regulation did not exist. Presumably you don't believe compliance is important enough to warrant having dedicated staff? This mindset may be one of the reasons financial advice is little nearer being a profession, rather than a job, than it was when the Financial Services Act was a gleam in Jim Gower's eye. Compliance may often be daft and formulaic in its execution, but it is necessary and, when well-executed, a benefit to advisor and client alike.

I have to agree with both Compliance Officer and John Whipple - the avaaz petition is badly-written and, as with so many of their petitions, dilutes the specific purpose (in this case getting rid of St. Hector of Sants' knighthood) into a generalised banker/politician bashing. Shame so few people have signed up, all the same.

Interestingly a better attempt at an HM e-petition failed for this reason - "E-petitions cannot include information about honours or appointments". Very handy.

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abtfinman

Jan 18, 2013 at 14:50

Julian

Ahhh, the brilliant Eagles. Will have more time to listen to them now.

Compliance Officer.

OK. A petition is useless. Let us see you bringing this list a better idea AND putting it in to practice.

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Compliance Officer

Jan 18, 2013 at 14:57

I'm a compliance officer abtf, not a miracle worker!

My version of a better idea can only be carried out on a personal level. It involves being constructive with my employer and helping them to act compliantly and maintain a good relationship with the regulator.

If you want to go on a crusade to change the system I wish you luck.

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Bob Donaldson

Jan 18, 2013 at 14:59

For 'stronger strategic leadership' read more of the same but with larger fines and bigger hob nailed boots creating more destruction within the industry!

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abtfinman

Jan 18, 2013 at 15:00

Man of Kent

"Presumably you don't believe compliance is important enough to warrant having dedicated staff?"

Did I say that? Don't think so. Without entering to a protracted discussion about compliance, it is the ethics and morallity of the adviser which is important. A tick box culture does not ensure that.

I was always ahead of the pack in qualifications and knowledge. I would not have survived as long as I did without the technical ability to look after my clients in the way in which they became accustomed.

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Julian Stevens

Jan 18, 2013 at 15:45

To abtfinman (a peculiar nom de plume) ~ along with The Ozark Mountain Daredevils, Joe Walsh and maybe even some lesser luminaries of that genre such as Poco, Pure Prairie League or the Nitty Gritty Dirt Band.

I never did like Hotel California, though ~ its four predecessors are all better in my book, in no small measure thanks to Bernie Leadon.

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Hickky

Jan 18, 2013 at 16:11

@ Julian

nom de plumes are trickky.

In the past I have been 'The Space Cowboy' at other times 'the Gangsta of Love', even 'Maurice'. However, people talk about me, sometimes not about love.

Much better than the exhorable Eagles anyway.

Must go outside for a smoke now.

Have a good weekend

Steve

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Julian Stevens

Jan 20, 2013 at 19:22

I cannot find in my Chambers or Oxford dictionaries (or even online) the word exhorable. Perhaps you mean execrable? Of all the Eagles albums (IMHO), only The Long Run approaches being execrable.

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Hickky

Jan 20, 2013 at 20:28

Sorry Julian, exhorable = typo. Execrable is more like it, but most of the Eagles stuff complies with this description. Why like the Eagles when you could listen to Frank Zappa, The Dead or Stevie Miller, they have much more... How can I describe it?

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Alistair Hinton

Jan 23, 2013 at 15:10

The article refers to "MPs", not just the single one pictured. Andrew Tyrie certainly has a good grasp of the necessary common sense but not a monopoly on it as implied by one poster here; his TSC colleagues, for example, do not row in a different direction.

That said, the best sense here has, once again, been provided by Julian Stevens who, whilst some might take exception to his persistent references to the need for monitoring and enforcement of FSA/FCA's compliance at all times with the Statutory Code of Practice for Regulators, he is absolutely correct on this, not least because there'd be no point in having such a Code if it could not be properly enforced and, as Mr Stevens knows, it is not in the case of FSA/FCA for the simple reason that no organisation is charged with the duty or vested with the power to do so. Until and unless that changes, the financial services regulator will continue to have carte blanche to do what it likes without fear or favour and, since it is immune from prosecution for damages arising from the consequences of its day-to-day actions and inactions, it remains the case that the law (in the form of FSMA2000) grants it powers that would otherwise be above the law; only the Government can change this, if it ever will.

That said, no law can guarantee that the financial service regulator will not make any mistakes in future, but the increased and due accountability of such an organisation to Parliament will at least ensure that it can be brought properly to book for any such failures and shortcomings should they occur in future.

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Julian Stevens

Jan 23, 2013 at 16:04

Thank you for your stout words of endorsement, Mr Hinton. As I posted some time ago, I did try to find out just which body is responsible for enforcement of compliance to the Code and why that body has done nothing. Ultimately, I got nowhere.

The Dept. for Business, Innovation & Skills (successor to the Dept. for Business Enterprise & Regulatory Reform) didn't even attempt an answer. It just passed on my letter to, of all bodies, the Treasury (that's the Treasury from which the FSA claims to be an independent body, mind).

The Treasury did nothing with it until I chased them up and then some junior urk basically faffed about until providing me with a non-answer that more or less said: We don't know and we don't really care, so please get lost and stop bothering us.

Subsequently, I raised the matter via my MP, in response to which the FSA fobbed him off with an outright lie to the effect that the FSA does indeed observe the Code. No examples were given and no reference was made to the body to which the FSA might supposedly be answerable for its compliance (or non-compliance) with the Code. As we know, no such body exists. The FSA only conducts compliance visits. It doesn't have to suffer them itself.

Andrew Tyrie and the rest of the TSC, including Pat McFadden who penned the foreward to the Code back in 2007, seem to have a complete mental blank spot when it comes to the Code. It's just never mentioned by anyone. Its creation was just tokenism of the most hollow and cynical kind. Maybe the powers that be decided that trying to tame the monster of Canary Wharf might throw up more problems than it would solve and hoped that if nothing more was said about it, people would quietly forget about it or give up trying to raise the fact that whilst the Code might look and sound good, there was never the slightest intention actually to hold any regulators to it, least of all the FSA.

Well, I haven't forgotten about the Code and I urge anyone reading about it to raise in every quarter possible the fact that it's supposed to be Statute and where in the FSMA 2000 is the FSA granted a unilateral opt-out from Statute?

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Alistair Hinton

Jan 23, 2013 at 16:39

@ Julian Stevens:

The answer to your final question is, of course, nowhere in that Act or indeed in any other piece of legislation; even FSA/FCA's statutory immunity from prosecution is enshrined in that same law, despite that fact that it as no business to be so.

I heartily commend your efforts to keep this anomalous situation afloat and join you in encouraging others to do the same.

I do not agree that you got nowhere with your efforts; more properly, you got somewhere other than where you wanted to get in discovering that no organisation exists to plice FSA/FCA's compliance with the Code, thereby making a mockery of its existence where it is itself concerned. I do not know what organisations monitor and police other regulators' compliance with the Code but I imagine that all the other regulators' behaviour is indeed subject to such independent monitoring.

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Julian Stevens

Jan 23, 2013 at 17:04

Hence my continuing calls for the creation of an Independent regulatory Oversight Committee with unassailable powers to block unreasonable or not properly consulted upon proposals on the the part of the FSA and to hold it to account when it's found to be in flagrant breach of the Code.

Andrew Tyrie may talk the talk but, if he doesn't call for enforcement of the Code, then he ain't walking the walk. It's all just hot air.

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