FSA chairman Adair Turner isn’t doing the Government any favours these days. Last week he told the BBC’s Andrew Marr that:
- HBOS could have been rescued with financial help from the Government and without merging with Lloyds; and
- both the FSA and the Treasury had known, from “stress testing” analysis carried out last October, that HBOS was heading for losses of the enormous magnitude.
Yesterday, Lord Turner was at it again, this time in an appearance before the Treasury select committee. From Gordon Brown’s perspective, the evidence he gave was less than helpful. Turner revealed that the FSA had been under pressure from the Government to exercise a non-intrusive “light touch” in its regulation of the financial sector:
“All the pressure on the FSA was not to say why aren’t you looking at these business models, but why are you being so heavy and intrusive, can’t you make your regulation a bit more light touch?
“We were supervising people like HBOS within a particular philosophy of the way you do regulation, which I think in retrospect was wrong.
”It was not the function of the regulator to cast questions over overall business strategy of the institutions – you may find that surprising.
”I think (the FSA’s actions were) a competent execution of a style of regulation and a philosophy in regulation which was, in retrospect, mistaken.”
Select committee chairman John McFall commented that Turner’s evidence raised serious questions about the FSA’s independence.
It also raises serious questions about the competence and motivation of the Prime Minister, who was personally responsible, as Chancellor, for putting in place a regulatory regime that was not only manifestly inadequate but also allowed scope for naked political interference.
1 Comment
February 26, 2009 at 9:06 am
Exactly! A common thread of New Labour and in particular Gordon Brown is the ’smoke & mirrors’ approach to everything. We were supposed to believe that the £400m cost of the FSA was a good investment because it regulated the financial services industry, meanwhile they were doing very little due to political pressure.
Gordon Brown must accept much of the responsibility, but equally, any regulator worth their salt would have objected furiously to politicians telling them how to do their jobs, without accepting any of the responsibility.