UK regulator risks losing the market's trust

Author: | Published: 1 Feb 2005

On 18 January 2005 the Financial Services and Markets Tribunal ruled on Legal & General's appeal against the fine imposed upon it by the FSA for alleged endowment mortgage misselling. With its decision, the Tribunal threw into the starkest of relief one of the most pressing regulatory issues of recent times, namely the inherent difficulties faced by the FSA in reconciling its supervisory role with the obligation to root out inappropriate behaviour in the financial services industry.

Ever since the FSA's creation this tension has been manifest. However, the cracks have become ever more noticeable since the retirement of former chair, Howard Davies, in September 2003. One of the first things John Tiner did as the new CEO was to launch an "end to end" review of the enforcement process in order to increase efficiency and response times. The aim of the review was to simplify documentation, streamline decision-making and encourage early settlement. Overall, the hope was...