2nd May 2014

Responsibilities, resignations, retributions

Yet again we see industry calls for responsibility in office from those who regulate. Last month’s news that somebody in authority at the FCA had set in motion a market crash in provider firms shares, and should be seen to carry the can for failure on their watch, could be seen as a breath of fresh air.

But is it the right person in the frame? And who will decide?

The FCA has agreed to a rethink of its investigation into the release by a senior regulator of market-sensitive information, after being accused of “marking its own homework”.

TSC chairman Andrew Tyrie somewhat damningly said of the revised review: “It is crucial – now that the FCA’s non-executive directors have commissioned this inquiry – that neither they nor the board play any further role until Mr Davis (Clifford Chance) has completed his final report.

Hector Sants told the TSC he was not responsible for any failures of the organisation since 2007 saying” the failures in the last decade, both conduct and prudential, come from a wide variety of sources” but vitally not from him.

Martin Wheatley has not exactly leapt to defend Clive Adamson from what I have read and I am not sure if  “Nothing to do with me mate” would be a credible TSC defence.

What we seem to be lacking in society today is some leadership by way of acceptance of a sense of moral responsibility at least for the failings of an organisation they head up when something goes wrong that was within their stewardship.  

I do not think we in the industry have witnessed that- yet!

Lord Adair Turner, once described by Kelvin McKenzie as “he of the ten-dollar haircut and the ten cent brain” arrived at the TSC telling them that making a regulator accountable would place a financial burden on the industry.

Why is it that those in an unelected position of power and authority fail to see that an element of responsibility should attach to that power? As Bernard Shaw once observed, “those who have once been intoxicated with power, and have derived any kind of emolument from it, even though but for one year, can never willingly abandon it”

Those who regulate must carry responsibility too because if there is no fear or sanction attaching to you doing “something really stupid, possibly knowing it was really stupid”, then all confidence is lost.

Shaw was right, “Power does not corrupt men; fools, however, if they get into a position of power, corrupt power”.

Just as an afterthought, an adviser sent me this last week from a CPD test, as he wisely observed, there should be an option 5- None at all.

Regulation, Panacea Comment