FSA wakes to its lost decade

By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE
Updated:

 

At long last, the City regulator has finally woken up and realised that its laissez faire regulation of the financial services industry has been an unmitigated disaster for consumers, says Jeff Prestridge Financial Mail's personal finance editor.

FSA Headquarters

'For far too long the FSA has been in thrall to the big banks

Why it has taken the Financial Services Authority's great and good more than a decade to come to this conclusion remains a mystery. It should have been pretty obvious that after the precipice bond misselling scandal of the early 2000s that consumers were not being protected properly.

But the FSA, holed up as it was in its Canary Wharf fortress in London's Docklands, simply put sticking plaster over any regulatory failings by fining a few miscreant companies and published some reassuring words about requiring companies to 'treat customers fairly'.

It then allowed yet another mis-selling scandal - that of payment protection insurance --to unfold.

Having played a big part in destroying consumer confidence in financial services, the FSA is now saying that it will try harder to nip emerging mis-selling scandals in the bud.

According to Hector Sants, its departing chief executive, the regulator will scrutinise new financial products closely before they go on sale as part of a more interventionist policy.

It will also liaise more closely with the Financial Ombudsman Service to pick up early on any possible mis-selling.

Let's hope that the new tougher, pro-consumer regulatory dawn promised by Sants materialises.

For far too long, the FSA has been in thrall to the big banks, with banking executives exercising influence in the regulator's corridors and seemingly calling all the shots.

Now that so many banks have disgraced themselves, hopefully the FSA will become more confident in its role so that it can regulate independently and effectively, thereby protecting consumers.

But given the FSA's past performance, I wouldn't necessarily bank on it.

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