Outlook: Not that bad

THE FINANCIAL Services and Markets Bill has had an extraordinarily bad (not to say ill-informed) press for what is in truth an entirely practical and relatively enlightened piece of legislation. So Howard Davies, chairman of the Financial Services Authority, must have been relieved by yesterday's report from the parliamentary committee which has been examining the Bill.

Essentially the legislation gets a clean bill of health. There are caveats. The committee recommends that eventually Mr Davies' position be split into the separate roles of non-executive chairman and chief executive. More importantly, it makes a series of recommendations to deal with the Treasury's original proposals on discipline and enforcement, which it thinks gave rise "to great concern". In particular it wants the Government urgently to ensure that the Bill fully complies with the European Convention on Human Rights.

But in most other respects the proposed set-up for regulation of the City and the financial services industry is broadly welcomed. So why was there such a rumpus about it all?

Concern has centred on three areas. First is immunity from prosecution for the FSA, which seems to leave few avenues of redress in cases of regulatory abuse. The thinking behind immunity is that the FSA wouldn't be able to do its job if it were constantly having to consider the possibility of being sued. It is for this reason that other enforcers - police, Crown Prosecution Service and judiciary - are also immune to legal redress, and always have been.

The committee rightly agrees that it should be no different for the FSA, even though what the FSA does is plainly rather different from that of a criminal authority. On the other hand, the City is so filled with rich and powerful organisations, that it could be argued the FSA's need for immunity is greater.

Second is the possibility of abuse in disciplinary proceedings. In this area, the committee properly recommends a series of safeguards to ensure fairness in proceedings. Some might disagree, but there is no good reason for those accused of financial abuse or negligence to have fewer protections under the law than a murderer or rapist.

The third area of concern is a more general one - that the FSA is a bureaucratic monster that will clog up the City with rules, regulations and red tape. Plainly this is a danger, but for the time being, very few of the City's big operators in the wholesale markets seem to think it much of one. Goldman Sachs cites the "enlightened" regulatory regime operated by the FSA as one of the reasons it is concentrating its European operations on London. Other foreign owned investment banks adopt a similar view.

The Financial Services Bill shouldn't be apologised for. Its early drafts contained some quite serious faults. However, the recommendations in Lord Burns' report should succeed in making what at root is a good piece of legislation, which ought to support and encourage the City's success, even better.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • 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.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

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
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before