View from City Road: Time for action on investor protection

How much longer can the debate about investor protection drag on? Andrew Large of the Securities and Investments Board yesterday threatened to continue it by promising a joint regulatory task force to 'take forward' work on, inter alia, product disclosure, an Office of Fair Trading report and awaited rulings from the new Chancellor.

It is difficult to take heart at this: there have been too many task forces, reviews and reports, and too few decisions. Mr Large himself acknowledges there is a danger of the same tired issues becoming stranded in a 'regulatory Bermuda Triangle, drifting around between the SIB, the OFT and the Treasury'.

For all the weaknesses of Mr Large's recently published review of the investor protection system, and all the sympathy we have for the preference of Mick Newmarch of the Prudential for a single-tier statutory regulator, it must be recognised that this is a non-starter. The Government does not want to consider new primary legislation in this area.

The existing apparatus must be made to work. This means there is no real alternative to the proposed Personal Investment Authority.

Many of the demands for higher standards are not terribly meaningful. But Mr Large has called for higher standards so higher standards there must be - or at least a flurry of activity to give the appearance of a move towards them. This has produced the dismal report from Sir Brian Jenkins, which has the usual (and undisputed) aims of honesty and competence, but whose principal recommendations would generate a fearful amount of bureaucracy.

Standards in the life insurance industry have already improved over the past five years. The numerous abuses uncovered demonstrate the original need for the Financial Services Act. Training and competence regulations are already being implemented by the self-regulatory organisations; they should produce much of the improvement everyone wants.

Mr Large should cut short the debate and get on with it. One must hope he has the power - and the government backing - to do so.