The Telegraph business section today - the grown-up bit of the newspaper – runs a story about the Financial Services Authority, styled as the "city watchdog", being "out of touch" with business.
The lament is that it is operated by poor quality staff who have a "civil service mentality" and little understanding of the businesses they oversee. So says a survey of more than 3,000 financial companies on the performance of the FSA, which also criticised it for "over-zealous implementation of EU directives".
Among its other sins, it was also said it was focusing on consumer protection "to the detriment" of its other responsibilities.
The report was commissioned by the Financial Services Practitioner Panel, made up of senior industry figures and chaired by Prudential chief executive Jonathan Bloomer. Half the companies surveyed said they "strongly agreed" that they were over-regulated and another third agreed to a lesser extent.
This is the regulator that has handed down more than £22m in fines since it become the single financial watchdog in December 2001. One can speculate that, if there was a regulator of regulators, whether the FSA would also be paying out fines for its own poor performance.
But chief executive of the FSA, John Tiner, partly excused his own organisation’s performance by arguing that European directives were "a huge influence" amounting to 70 percent of FSA policy work. Such is the drag of the EU on one of our most important and profitable industries.
But there is another lesson here. No one could blame the EU directly for the stranglehold the FSA has over the financial services industry, but what you will note from the Telegraph piece is not what it says, and who it quotes, but who it doesn't quote. There is no political voice speaking.
The existence of EU law and its every-growing control over vast sections of our productive life not only creates increasing burdens, it also de-politicises the business of regulation. MPs and even ministers no longer take an interest in the activities of the regulators because so much of their work is outside their responsibility. Effectively, these regulators take their orders from Brussels, and what they do is none of the business of UK legislators.
Brussels – i.e., the commission – however, has neither the resources nor the immediate interest in controlling the day-to-day activities of the regulatory authorities in the member states, which means that they effectively run themselves – with the results that are now all to plain to see.
That is one of the important, if little understood side-effects of rule from Brussels. Our own systems of political scrutiny, oversight and control have been broken down and no longer function. What has replaced it is ineffective – and ever more will be so.
What we are seeing, therefore, is the effects of what Christopher Booker and I have called a slow motion coup d'etat, where gradually the bureaucrats are taking over, and the politicians have been robbed of their power to do anything about it.
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