City regulators flex their muscles

Christopher Sharples is not someone for whom the label shy and retiring was invented. The chairman of the Securities and Futures Authority, the main City watchdog, talks a good line. Increasingly, he is doing so publicly and vigorously. The days when regulators preferred to inhabit the shadows are long gone. Instead we have a public relations battle, as the City's various regulatory bodies jostle with unseemly vigour for position. There is a distinct impression, hotly denied of course by the main protagonists, of a concerted campaign against the umbrella regulatory organisation, the Securities and Investments Board.

Driving these ructions is, above all, fear of what a future Labour government might do. Alistair Darling, Labour's City spokesman, has expressed strong reservations about the way in which regulatory responsibilties are currently organised, and dropped broad hints about a radical restructuring, concentrating powers for regulating the financial services sector in one, central body.

Mr Sharples, arm-in-arm with Phillip Thorpe, chief executive of Imro, the fund managers' watchdog, are happy to accompany Mr Darling for the part of the journey that describes the current set-up as confusing. But they desert him brusquely at the point where he infers this can be improved by wrapping the powers of the SFA and Imro into a single, dominant entity, probably a super-SIB.

As Mr Sharples admitted yesterday, the latest round of proposals for getting tough with the City is as much about positioning the SFA for a future regulatory shake-up as anything else. Regulation is not widely held to be one of London's strongest features, as international financial centres compete ever more furiously. Mr Sharples is right to be worried about image. But it is questionable whether the present argy-bargy and muscle-flexing is going to provide a satisfactory solution.