James Moore: Discipline and the watchdogs

Outlook When it comes to the disciplinary process, one suggestion that appears to be gaining traction is making the FCA's "Regulatory Decisions Committee" fully independent of the FCA.

The RDC is the first adjudicator when it looks like the watchdog is set for a fight with a person or company in the cross hairs of its enforcers. The idea of cutting it loose from the FCA is presumably that this might lead to better decision making, a more robust process generally, and less whining from miscreants.

Some hope. City cheats are like sports drug cheats. They never admit anything until it's proven beyond not just all reasonable but beyond all possible doubt. And then they bitch about the process and try to exploit technicalities.

But the fact is there is a fully independent tribunal which was set up to hear their pleas, and which has proved perfectly willing to intervene when the FSA got things wrong. As it did with Legal & General over endowment misselling (the insurer won a partial victory).

It was after this affair, when the regulator was made to look very foolish in what amounted to an open court, that the RDC was bolstered and made more powerful.

Senior people who have worked in the field have told me this made the job of enforcing discipline more difficult. Could that be one reason that so many senior bankers got off? It might be.

The tribunal, whose decisions are subject to judicial review, should be sufficient to keep the watchdog honest. So why not simply cut the RDC out of the equation?