Editorial: The FSA was not the only villain

 

Share

The Financial Services Authority’s 15-year reign over the City of London ends today – and few will regret its passing.

Not only did the FSA make little attempt to stop Britain’s banks steaming full-tilt towards the financial crisis from which we are still suffering the after-effects. To add insult to injury, the watchdog also failed to hold those responsible to account.

In fairness, however, the FSA was a victim as well as a villain. Many of the scandals that dogged the regulator in its early years were exacerbated by its difficult birth from the merger of nine different organisations. 

The so-called “tri-partite” structure – splitting regulation between the Treasury, the Bank of England and the FSA – also hardly helped. Even during the worst phases of the financial crisis, it could be difficult to establish who was responsible for what.

As a result, it was all-too easy for the Government to use the FSA as a scapegoat, blaming the catastrophic over-reach of Britain’s financial sector on the regulator’s failure to consider “systemic risks” (even though such concerns were not within its remit). That the FSA was the brainchild of the former Labour government only added an extra, political dimension to the Coalition’s regulatory shake-up.

It should also be noted that the crisis reflected at least as badly on the Bank of England – which is about to take on a chunk of the FSA’s former role. Even the reticent Governor, Sir Mervyn King, has admitted that the threat to Britain’s financial stability from our overweening banking industry should have been “shouted from the rooftops”.

The FSA could never have survived the manifest failures of the system of which it was a part. But it alone was not responsible for the crisis, and its abolition is not enough to ensure that the problems are solved. It can only be hoped that the lessons learned by the FSA are not squandered, and that the Bank resists its natural tendency towards hubris now it has assumed so pre-eminent a role.

React Now

Latest stories from i100
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: 1st Line IT Engineer

£18000 - £24000 per annum: Recruitment Genius: This is a fantastic opportunity...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£13676.46 - £16411.61 per annum + Uncapped OTE: SThree: Trainee Recruitment Co...

Day In a Page

Read Next
 

An unelectable extremist who hijacked their party has already served as prime minister – her name was Margaret Thatcher

Jacques Peretti
 

I don't blame parents who move to get their child into a good school

Chris Blackhurst
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent