On 18 January 2013, the Treasury Select Committee (TSC) published its "Report on the appointment of John Griffith-Jones as Chair-designate of the Financial Conduct Authority" (FCA).
The report is brief and to the point:
- "The [FSA] failed consumers. Although it devoted a great deal of time and effort to conduct matters, it left consumers exposed to some of the worst scandals in UK 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";
- "The board of the FSA ...appeared to fail in its oversight of ... the Authority";
- "The [FCA] needs to develop a markedly different culture from that of its predecessor, which was deeply flawed";
- "Many customers of the financial services sector have been as poorly served by regulators as by firms in recent years".
Although these assertions are partially true, they're also deeply revisionist. They blame the man for the policies of his master, and a policeman for a criminal's crime. They also give us a glimpse of regulatory failures to come. One thing the FSA has been especially good at is recognising when things have gone wrong, admitting its errors, and trying to do better next time. One of its early mistakes was to take what now seems like an overly relaxed approach to the authorisation of new firms, and the approval of new controlled function holders. When the FSA extended it significant influence function regime, and started to interview applicants for controlled function holder status, it admitted that it's earlier approach had been wrong. Strange, then, to see the TSC note that, although "the incentives for regulators not to take the risk of authorising a new bank are strong... We will expect the FCA to demonstrate that it is doing everything it can to make the authorisation of would-be new entrants to the banking sector as fast and straightforward as possible". Surely, they know not what they say.