More of the same?

The Financial Services Agency, typical of NuLabour quangos whose effectiveness does not grow with the accumulation of power and resources as well as slavery to the EUSSR, has just asked for an increase in funding.

Since its set- up its staff has grown from 1,362 to 2,740 and its annual bill to over £300 million. Last year, according to the Daily Telegraph(18.10.08) average salary, including training and pension contribution was £77,000. The six directors were paid £490,000 on average. Lord Turner, the newly appointed chairman, in asking for more funds, claimed recently that "..we have been trying to do regulation on the cheap." He argued for more staff and more pay for them. All this fails to record the vast expense of banks and other organisations in trying to comply with the enormous increase in detailed regulation.

The higher salary bill will, of course, be passed on to the organisations regulated, which ultimately will mean that we all pay higher banking and other charges such as ISA fees. At a time when saving has been far too low and individual financial advisers have been forced out because of excessive compliance costs, it seems unfortunate to say the least that that customer costs will be raised yet again. To the shame of David Cameron, he agreed with the need for more spending by the quango.

Earlier this year the Treasury Select Committee concluded that the FSA had failed substantially in its regulation of the banking system, especially in the collapse of Northern Crock. Even I was concerned about a business plan which involved borrowing short and lending long. The Quango, according the select committee, had failed to allocate sufficient time or resources to monitor the bank. Hence, presumably the demand by Lord Tuner for more funding. The select committee nowhere suggests that the Quango needs more funds, merely that its allocation of resources was inadequate.

The real need is not to extend control more and more intrusively, but to do its present functions more effectively. The experience of the USA, which through the Sarbanes Oxley Act severely hampered its own financial system after the Enron scandal, still failed to spot the current crisis coming.

What is needed is a remit which concentrates on just a few identifiable and major problem areas, and a less cumbersome way of controlling the system than the laborious paper chase at present.

The FSA is a prime example of all bureaucratic organisations whose main aim from outside seems to be merely to expand its staff and salaries and to impose greater and greater control over individuals and organisations, again classic NuLabour.