Sam Dunn: Hail the advent of zero tolerance in finance

Businesses may carp, but the City regulator is right to get tough on any misdemeanour - no matter how small

Bitch, moan, gripe, grumble.

Half an hour with certain members of the financial services industry, and you'd think they had the hardest jobs in the world. Their beef? The Financial Services Authority (FSA).

The City regulator meddles, pokes about, insists on unnecessary and laborious paperwork, and instils overbearing checks - all at inordinate cost to their livelihoods, they claim.

For sure, plenty of small firms, independent financial advisers (IFAs) among them, are struggling with the costs of regulation - notably, that of insuring themselves against malpractice and mis-selling claims.

But the good that the watchdog does more than outweighs this cost - and I'm a believer that if they play by the rules, any financial firm should be able to ride out the rough times.

I'm no FSA toady, but credit where it's due, and not enough is given to it for looking out for the consumer as it scans the UK's financial services landscape.

Its officials are busy raking across the different sectors of industry, investigating and chasing after bad practice.

It is beginning to ape an approach introduced by former New York mayor Rudy Giuliani in the 1990s: zero tolerance.

Where Mr Giuliani clamped down on routine street crime to spread the message that every sort of offence would be taken seriously, so the FSA's enforcement teams are taking the same approach in financial services.

Rather than just impose huge fines, such as the £800,000 levied on Abbey in May for mishand- ling mortgage endowment complaints, it is busy with lots of low-level activity to clear away the practices that distort consumers' ability to make fair judge- ments about financial products.

In the past five weeks, highlights have included tightening controls on venture capital trust marketing; insisting on clearer information in customer insurance documents; deepening its inquiry into payment protection cover; and fining IFA Kings £60,000 for approving misleading financial promotions.

These come on top of more high-profile activities in October, including the launch of a website called, which tries to demystify home loans and the fees that can make it difficult to tell a good deal from a bad one.

All this good work has inevitably made it some enemies. Indeed, its mortgage website has attracted snivelling comments from some brokers, who are clearly annoyed by its efforts to help consumers.

Earlier this year, when it faltered in its pursuit of Legal & General for endowment mortgage mis-selling - a £1.1m fine it levied was halved after a tribunal review - the crowing in many parts of the financial services community was loud enough to make your ears bleed.

The FSA is in a difficult position: its statutory tasks involve the maintenance of market confidence as well as consumer protection - and sometimes these two can grate. This guarantees criticism from all quarters, including consumer groups that often claim the regulator pulls its punches and doesn't go far enough to protect customers.

Not that the brickbats appear to have put the FSA off, and good job too.

It's no secret that the financial services industry is still stuffed with modern-day mountebanks and charlatans preying on consumers' ignorance to make a quick sale and pocket profit and commission.

Any organisation that aims to turn individuals into knowledgeable financial consumers, who can engage on equal terms with the salesmen, is to be welcomed - whatever its faults.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'
    Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

    Flesh in Venice

    Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
    11 best anti-ageing day creams

    11 best anti-ageing day creams

    Slow down the ageing process with one of these high-performance, hardworking anti-agers
    Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

    Juventus vs Real Madrid

    Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
    Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

    Ashes series looks a lost cause for England...

    Whoever takes over as ECB director of cricket, says Stephen Brenkley
    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power