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 mortgageslaidbare.co.uk, 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.

s.dunn@independent.co.uk

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

PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
News
i100
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
News
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Tax Assistant

    Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

    Recruitment Genius: Outbound Sales Executive - OTE £25,000

    £16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

    £45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

    Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

    £35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Day In a Page

    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project