FSA attacks Blair as speech causes tensions to boil over

The Financial Services Authority has challenged the Prime Minister over a speech in which he declared that the City regulator was "seen as hugely inhibiting of efficient business".

The Financial Services Authority has challenged the Prime Minister over a speech in which he declared that the City regulator was "seen as hugely inhibiting of efficient business".

Callum McCarthy, the chairman of the FSA, wrote to Tony Blair last week to protest, saying that the remark had undermined the authority of the regulator.

The letter said: "It is damaging to our influence and our abilities to support the principles of better regulation to be described in the way that has occurred, hence our anxiety to establish whether there is any evidence to support the claim, which appears to be unfounded."

Mr Blair's speech, delivered at London's Institute of Public Policy Research, was a broad-ranging attack on over-regulation of all aspects of life in this country. But within it, he singled out the FSA for criticism.

"Something is seriously awry when teachers feel unable to take children on school trips, for fear of being sued; when the Financial Services Authority that was established to provide clear guidelines and rules for the financial services sector and to protect the consumer against the fraudulent, is seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone; when pensions protection inflates dramatically the cost of selling pensions to middle-income people ..." he said.

The Prime Minister said regulators must not try to eliminate risk altogether, as "a risk-averse business culture is no business culture at all. There is usually a seductive logic to any new regulation. There is almost always a case that can be made for each specific instrument. The problem is cumulative. All these good intentions can add up to a large expense, with suffocating effects", he said at the end of last month.

Downing Street confirmed it had received a letter from the FSA but a spokeswoman said Mr Blair stood by the speech. "The Prime Minister, of course, values the work of the FSA but he was talking about perceptions. If parents, members of the public and business perceive there is too much red tape and regulation in their day-to-day lives, it is right that the Government look at this," she said.

The FSA, in its letter, asked for a meeting with the officials who drafted Mr Blair's speech and offered a briefing with the Prime Minister to explain its work. It is thought that one of the authors of the speech was a leading Downing Street adviser, Matthew Taylor.

The regulator, which was established by Mr Blair's government early in its first term, does not accept that it is perceived as heavy-handed.

The FSA believes that a number of studies, including the Government's own Hampton review of regulation, published this year, have concluded that the City is well and appropriately regulated. The FSA is said to be "bewildered" by Mr Blair's attack, which it thinks is at odds with the Treasury view.

A spokesman for the watchdog declined to comment, saying only that "this was a private letter by Mr McCarthy to the Prime Minister".

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

'I may be deaf, but you can still talk to me'

'I may be deaf, but you can still talk to me'

Being a teenager is hard enough – for those with hearing loss, it can be even more complicated
A right royal trip down the river

A right royal trip down the river

A new exhibition celebrates the glory days of London's mighty Thames
The 10 Best lawn mowers

The 10 Best lawn mowers

From petrol-fuelled to self-propelled
Every second counts

Why does life appear to speed up as we get older?

Matilda Battersby finds out how the clock plays tricks with our minds
Couture on the Croisette: Fashion hits

Couture on the Croisette

The best outfits from the 2012 Cannes Film Festival
Child of the revolution: the Burmese family that democracy brought back together

Home of the free

The Burmese family that democracy brought back together
Cannes review: Canine accolade and Hitler's return are high spots amid the gloom

Cannes review

Frocks, canine accolade and Hitler's return
Robert Fisk: The going price of getting away with murder... would $33m be enough?

The going price of getting away with murder

Robert Fisk: The long view
Principled Skinner rises above the fray

Principled Skinner rises above the fray

Andy McSmith meets Dennis Skinner
Patrick Cockburn: I fear this terrible massacre will be the beginning of a long civil war in Syria

Patrick Cockburn

I fear this terrible massacre will be the beginning of a long civil war in Syria
Hardeep Singh Kohli: For me, it is all about 'Gregory's Girl', a record of first love

Hardeep Singh Kohli

For me, it is all about 'Gregory's Girl', a record of first love
Christian Louboutin: 'I don't think comfort equals happiness'

Christian Louboutin interview

'I don't think comfort equals happiness'
Happy birthday, Hotel Babylon!

Happy birthday, Hotel Babylon!

Hollywood's home to the A-list celebrates 100 years of discreet luxury
Rupert Cornwell: Low-rise capital could finally reach for the sky

Rupert Cornwell: Out of America

Low-rise capital could finally reach for the sky
The secret life of the red carpet

The secret life of the red carpet

As Cannes reaches its climax with the Palme d'Or and the celebrities gather in London for the Baftas tonight, Kate Youde and Jack Dean investigate the real star of the show