In defense of the Financial Services Authority

Posted in Business by solle on 20/12/2008

The Financial Services Authority (FSA) continues to receive a lot of criticism ranging from being ineffectual in its remit, incompetent in charge of great responsibility, being knee deep in middle managers and having preposterously lengthy guidelines and manuals – and the condemnation has been especially vocal during these trying and difficult ‘credit crunch’ times.

Now some of this opprobrium might be correct but I believe things would be a darn sight worse without them. I mean what a job to attempt to keep some of the most wealthy and powerful people and companies in line.

It’s almost the impossible job.

Everyone is going to hate you, moan about you, criticise you, and generally bemoan your very existence. And then when you do act and serve up some unpleasant regulation and investigation medicine everyone is going to accuse you of being one step from the Third Reich.

It’s a battleground out there.

It seems that many people in the City hark back, with almost tearful sentimentality, to the regulation bodies before the advent of the FSA when guidelines were squeezed into slim ‘brochureware-style’ publications advocating that everyone “act responsibly” and encouraging self-monitoring.

Now that’s fine and dandy for the handful of responsible and honourable operators in the City and beyond but really it doesn’t do for the majority. How does self-regulation protect Mr Smith et al?

It doesn’t and never has and never will.

At least the FSA is trying to protect Mr Smith et al. For this they should always be supported. They also protect firms that fall under its regulation (obviously the ones that play by the rules – and the rules really aren’t that problematic for honest firms just a little buried in reams and reams of paperwork).

In a world of Bernard Madoff, Lehman Brothers, Matthew Devlin (seems like there’s a new one everyday) and the subprime mortgage crisis who really believes anything but the strictest regulation will do.

I really believe it has come to pass. There is no other choice and you really cannot have one rule for some and other rules for others.

It may seem like a dissident voice (and I’m neither a compliance professional nor a financial services professional) but I offer my support to the Financial Services Authority.

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