What are the government’s real plans for the financial regulators?
Friday 09 July 2010 by James Dean
After the big bang, the silence. George Osborne may have wowed the City with his promise to smash the Financial Services Authority (FSA) at Mansion House a couple of weeks ago, but what on earth have we leant since then about our new financial regulators?
Osborne’s wish is to scrap the FSA by 2012 and hand most of its power to the Bank of England. A new Economic Crime Agency (ECA) will become the serious economic crime-buster (and most likely, take the lead on civil prosecutions), while the Consumer Protection and Markets Authority (CPMA) will regulate financial services companies (and most likely, take the lead on criminal prosecutions). On top of all this will be the Financial Policy Committee (FPC) to monitor economic and financial stability.
On first look, one could be forgiven for thinking that the Serious Fraud Office (SFO), FSA and Bank of England have merely been rebranded, and their powers tweaked a little. This is given a little weight in light of events that followed Osborne’s announcement.
FSA chief executive Hector Sants said in February that he would quit this summer, but (apparently with a little nudge from Osborne) will now stay on to oversee the transition from FSA to CPMA (‘it was my public duty,’ he said). Less than three weeks ago, the FSA held its annual enforcement conference – a glitzy affair in plush conference facilities in central London. Sants and FSA enforcement director Margaret Cole seemed completely unperturbed by Osborne’s announcement the week before, when delivering impassioned speeches about the number of white-collar criminals they’d put in the dock over the last year. Unfortunately, they knew not (or at least, told little) about the future of their organisation.
This week, in the vain hope of finding some answers, I went to magic circle lawyers Allen & Overy for a briefing on regulatory reform. Litigation partner Calum Burnett made the interesting point that the FSA is going through a ‘purple patch’ at the moment in terms of pushing through lots of cases, on the back of a successful clearout of underperforming staff and an influx of skilled investigators. ‘That’s all going to be thrown up in the air,’ he said. But what’s the landscape going to look like in two years’ time? ‘That’s unclear,’ he replied.
Litigation partner Arnondo Chakrabarti said that the SFO has been pushing for new powers for some time. Failing this, it has tried (and failed) to stretch its existing powers . In its probable new, beefed up guise as the ECA, it may well receive these powers following a rewrite of the Financial Services and Markets Act. However, again, Chakrabarti said the muddied waters had not cleared.
Perhaps somebody at the SFO itself had some answers? At a press gathering one evening this week, assembled investigators said over a glass of wine that they, er, didn’t really know what was going to happen – although one who had been on secondment to the FSA did hint that FSA staff are more than a little worried about their jobs. Not so at the SFO, it appeared. Meanwhile, director Richard Alderman remained tight-lipped.
So we find ourselves in one of these unofficial government consultation periods: make dramatic speech and announce the bones of a policy, stay quiet for a bit and listen to the fallout, and then try to iron out any concerns from the market while adding the flesh. In the meantime answers are, unfortunately, few and far between.
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Comments
FSA
I remember reading the Financial Services Act back in whenever and I remember a shiver going down my spine. This process killed the Independent Insurance Advisors. It made a nonsense of 'best advice'
One of my secretaries [age 23] went off to be an Agent for I think GRE [where are they now]? . I met up with her at one of their 'dos' She was doing well, making lots of commission. She was adamant [after attending 4 hours of brainwashing] that she could offer 'best advice' but obviously all the 'products' came from GRE. So how can that be 'best advice' !!!!
.To be honest I think the world has gone mad. People not taking out Pensions - well quell surprise! You hand your hard earned to these people and then you get back less than you gave them and they charge a fee! [just to rub salt into the wound]
I remain your honorable servant
etc etc
FSA
I remember reading the Financial Services Act back in whenever and I remember a shiver going down my spine. This process killed the Independent Insurance Advisors. It made a nonsense of 'best advice'
One of my secretaries [age 23] went off to be an Agent for I think GRE [where are they now]? . I met up with her at one of their 'dos' She was doing well, making lots of commission. She was adamant [after attending 4 hours of brainwashing] that she could offer 'best advice' but obviously all the 'products' came from GRE. So how can that be 'best advice' !!!!
.To be honest I think the world has gone mad. People not taking out Pensions - well quell surprise! You hand your hard earned to these people and then you get back less than you gave them and they charge a fee! [just to rub salt into the wound]
I remain your honorable servant
etc etc
FSA
I remember reading the Financial Services Act back in whenever and I remember a shiver going down my spine. This process killed the Independent Insurance Advisors. It made a nonsense of 'best advice'
One of my secretaries [age 23] went off to be an Agent for I think GRE [where are they now]? . I met up with her at one of their 'dos' She was doing well, making lots of commission. She was adamant [after attending 4 hours of brainwashing] that she could offer 'best advice' but obviously all the 'products' came from GRE. So how can that be 'best advice' !!!!
.To be honest I think the world has gone mad. People not taking out Pensions - well quell surprise! You hand your hard earned to these people and then you get back less than you gave them and they charge a fee! [just to rub salt into the wound]
I remain your honorable servant
etc etc
FSA
I remember reading the Financial Services Act back in whenever and I remember a shiver going down my spine. This process killed the Independent Insurance Advisors. It made a nonsense of 'best advice'
One of my secretaries [age 23] went off to be an Agent for I think GRE [where are they now]? . I met up with her at one of their 'dos' She was doing well, making lots of commission. She was adamant [after attending 4 hours of brainwashing] that she could offer 'best advice' but obviously all the 'products' came from GRE. So how can that be 'best advice' !!!!
.To be honest I think the world has gone mad. People not taking out Pensions - well quell surprise! You hand your hard earned to these people and then you get back less than you gave them and they charge a fee! [just to rub salt into the wound]
I remain your honorable servant
etc etc
FSA
I remember reading the Financial Services Act back in whenever and I remember a shiver going down my spine. This process killed the Independent Insurance Advisors. It made a nonsense of 'best advice'
One of my secretaries [age 23] went off to be an Agent for I think GRE [where are they now]? . I met up with her at one of their 'dos' She was doing well, making lots of commission. She was adamant [after attending 4 hours of brainwashing] that she could offer 'best advice' but obviously all the 'products' came from GRE. So how can that be 'best advice' !!!!
.To be honest I think the world has gone mad. People not taking out Pensions - well quell surprise! You hand your hard earned to these people and then you get back less than you gave them and they charge a fee! [just to rub salt into the wound]
I remain your honorable servant
etc etc
FSA
The previous commentator is absolutely correct about the Financial Services Act.
After this Act every insurance salesman become a "financial adviser"-and the advice was "free"!
Except that they were still salesmen being paid on commission who had no concept of professional duty and were certainly not independent. The advice wasn't free- the cost came from the premiums which were duly inflated.
Solicitors have gone down this route -with "referral fees" (i. e. selling their independence) and it probably cannot be reversed. Goodbye to a profession.
The Worst of All Worlds
Yes, The IFAs became rich on commission and the tied people also. Now they will charge fees for time spent, just at the time solicitors are moving into fixed fees. Solicitors have given up their freedom, suffer fixed fees and pay commissions. The worst of all worlds. What a bunch of no hoper suckers we are.
FSA
I happened to be speaking to a senior partner in a regional firm of accountants who said a colleague has been instructed to advise on the possibility of the FSA taking over the responsibility of the SRA.The basis for this is that the FSA understand the relationship of the complainant much better( presumably because they are better trained)but more importantly it could save the profession £150 million pounds over the next 5 years.
If anyone has further information could they please add it to the debate
Please let it be true! The
Please let it be true!
The SRA has been a parasite on the profession both financially and morally since it was created.
It has increased its powers and empire built and even now doesn't realise that the profession it regulates is in terminal decline.
The latest charade is the "outcome based" regulation which comes complete with a tick box list of things which are "evidential" i.e. compulsory-so no change.
The Chairman is a placeman from the City- no doubt put there to oversee the destruction of the professions independence and ensure large profits for the large firms.
The FSA would be a relief after this shower.