FSA after McCarthy
The Treasury has begun the search for a new chairman of the .
It has appointed the headhunters Egon Zehnder to find candidates, and has put an advert in today's Financial Times.
In the wake of the , there will be speculation that the current chairman, , has been forced out.
The FSA has conceded that it failed to spot the risks being run by the way Northern Rock financed itself in wholesale market, till it was too late.
But my understanding is that he always intended to serve just the one term, which ends in September of this year. He will be 64 this year.
The FSA chairmanship will be a difficult job to fill, not least because the Chancellor, Alistair Darling, has already announced that there will be significant changes to the financial regulatory system but has not precisely specified these changes.
Right now, any candidate would not know what kind of organisation he or she would be taking over.
Mr Darling has however indicated that the FSA will have great powers to intervene when banks run into trouble, to pre-empt a repetition of the massively damaging run on the deposits at Northern Rock of last September.
In the City, there have been rumours that the likely successor would be , a former chief executive of HBOS, the big bank – who is currently deputy chairman of the FSA.
However, Mr Crosby has told friends he is uninterested in becoming chairman.
Other possible candidates would be the former second permanent secretary at the Treasury, Sir Steve Robson, and Lord Turner, the former director-general of the CBI who came up with the blueprint for the new national pensions saving scheme.
Mr McCarthy, who is a former investment banker and has also worked at the Treasury, is widely liked and respected in the Government, not least because he was regarded as a highly successful regulator of the energy industry.
The first term of the Governor of the Bank of England, Mervyn King, also expires this year - and there has been no announcement about whether he will be re-appointed.
I'm 
°ä´Ç³¾³¾±ð²Ô³Ù²õÌýÌý Post your comment
Dear God... The last thing we need is another Treasury/City sycophant running the FSA.
Let's have an engineer for a change or someone that's actually run a real business...
If the FSA have conceeded that they failed to spot the risks at the Rock- in other words tasted their business model and asked basic "what if" questions, how can the Government now say that the Rock's management are wholly to blame for its collapse?
Someone had to pay the price for Northern Rock.
It is clear from the Peter Hain affair that incompetence rather than being a hindrance to cabinet office seems to be a pre requisite so there was no chance of either Gordon Brown or Alistair Darling falling on their swords.
Mervyn King has got to stay to shore up what little credibility New Labour has with the markets so there could only be one fall guy.
Anyone want to guess how long before he has another job on another Government appointed meal ticket?
What about asking Tony Blair to do the job?
Now THAT ould be fun!!!
The FSA is the worlds most expensive club run by bankers for the benefits of bankers. They didn't spot Northern Rock because they were too busy running the financial services industry into the ground with yet another review: The Retail Distribution Review. If you read this you will see that the net result will be to hand over the provision of financial services to guess who? Yes you guessed bankers!
If the Retail Distribution Review is implemented it would be a benefit to banks and a detriment to independent advice.
This was of course before Northern Rock and the wide scale rejection of RDR by the industry and financial press. In their defence The FSA claim the IFA commission model is broken. They of course have no evidence. Indeed evidence to the contray exists i.e. IFA's generate 80%* of distribution but are only responsible for 12% of complaints. Guess who is responsible for the remainder? Go on just guess!
What we need is someone who is not frightened by banks and not intimidated by either the banks or Government. A very rare individual indeed. Unfortunately, what we will no doubt end up with is an individual who is already owned by either one or both.
Eddy Weatherill - Chief executive
Independent Banking Advisory Service (IBAS)
Northern Rock should sell stakeholder mortgages!
So Ron Sandler has been chosen by the Government to run Northern Rock if the lender is nationalised. I suggest he should be obliged to run it based on stakeholder costs i.e. a 1% profit margin as he suggested for the pensions industry! Maybe the taxpayers will be delighted with this low non profit approach to business?
Ron should know just how to run a bankrupted building society; after all he knew how to reduce the pensions industry to a similar state! Sandler has been a party to a regulatory machine that has seen a combination of increased compliance cost, growing regulatory fees and the removal of distribution costs from Stakeholder Pensions (SHPs).
This system has encouraged many advisers, to stop providing Stakeholder Pensions. Market data shows that fewer personal pensions are now being sold via advice to individuals quite simply because there is no provision for the cost of advice within the Stakeholder charging structure and many client have an aversion to fee payments. Association of British Insurers statistics report that the number of new regular premium contracts has fallen by 61% since 1998.
In this sense SHPs have not worked in consumers’ interests as they have restricted the availability of advice and fund choice. The resultant market contraction has meant that some consumers who should be saving for their retirement are now not given the advice and access to personal pension products that they need. The net result has done more damage than any misselling – maybe Ron will know just how to run a bankrupt building society because he knew how to reduce the pensions industry to a similar state!
Scamp is dead right. The job of gamekeeper should not be filled by an ex poacher. Get someone in who is prepared to stand up to the banks in the interests of their customers and the taxpayers.
Sounds like just the job for Adam Applegarth. I've heard he is looking
for one :-)
The FSA answer to no one except the Treasury (well nearly - see below). The Law that governs them allows them to make new laws under the heading of "guidance" any time they like.
Unfortunately, whoever is appointed is likely to have been sold the position on the basis that they can make up any rules they like and that there is a captive population of subjects to rule.
I have said unfortunately because Financial Firms can ignore FSA by claiming that they are European and "passporting" in to the country . European Law trumps FSA rules as the recent MiFiD backtracking has shown.
Whoever decides to take up the role should remember that their domain may disappear overnight if firms decide to passport in and if it all then goes belly up like the Rock did the head honcho at FSA will get the blame.
Would you want a job with all of the responsibility but no accompanying authority?
whoever they persuade to take this poison chalice should ask some serious questions about just what they would be liable for and who are they definitely going to be in charge of.
Firstly Equitable, then splits, endowments, pension miss selling, now Northern Rock ..... well done to the FSA, nee SIB, for Lautro and all the rest of the blunders they caused. Falling on swords is not the answer, mass destruction of the regulators might bring some common sense back to the financial services industry. The OFT (as was), was more than good enough to sort out the wheat from the chaff. The most expensive regulator world wide is doing a total dis-service to what was the best service industry in the world, by interfering in a free market economy. RDR will, if allowed to continue, be the final nail in the coffin.
So the Mary Celeste is to be given a new captain. No wonder Ally D was off his egg banjo this morning. In an unguarded moment he was heard to complain that Mother Brown would not countenance the idea of scuttling the ship and starting all over again with a new flagship for the fleet using the Threadneedle to provide cover in case of storms. Unfortunately Ally D has no stomach for a disagreement with Mother B. The prospect of dealing with the wreck of the SS Northern Rock still brings him out in a cold sweat. Apparently there was some organisational confusion which lead to the current chaos and Mother B is keeing the lowest of profiles. The Rocks owners are demanding compensation whilst Ally D is being asked to pay for the salvage. He is still facing enormous difficulties calculating the salvage value as it seems to change daily. The captain of the Threadneedle, quite rightly, accepts no blame for the wreck and the Celeste was miles away when the Rock was holed below the water line. So the jolly nautical saga continues. Watch this space.
With a background in Youth Work, joining the FSA was a bit of a culture shock for me! But I have to say I have been impressed by the organisation and in particular Callum McCarthy. I am not a regulator and I admire anyone who is, it is a thankless task. Trying to pin the blame on the FSA for what happened with Northern Rock is a bit like trying to pin the blame for Iraq on the UN.
How about getting someone from joe public in? Start using plain English and common sense. Ask straight questions and demand straight answers.
Who needs an accountant? If rumours are to be believed, the Finance Director of the MoD does not possess any financial or accountancy qualifications.
On a more serious note, get someone on who cares about customers - not shareholders or MPs.
There have been a number of FSA failures, apart from its failure in spotting risks associated with Northern Rock. Remember the Equitable Life debacle for one.
The FSA has a very wide brief and there is the thought amongst some financial professionals that its span of control is too great for it to act effectively. It is spending a great deal of its energies in bringing in too many new initiatives for it and the regulated to cope with. Perhaps it is time to for a full review into whether the FSA is actually fit for purpose as it stands rather than papering over the cracks with a judas goat sacrifice of its chairman.
Bloomberg reports that a French chemist and perfume specialist has been engaged to produce a propitious atmosphere at the Davos Forum.
Perhaps the FSA should be searching for the "perfumes" used by major US, UK and other banks and traders to sell on their convoluted financial instruments when many of them knew of their toxicity. They could then produce counter flavours that would enable buyers to be clear-headed and exercise due diligence on behalf of the pension and other funds they represent!
Should not the Bank of England get more powers than FSA to monitor and act against the banks?
Surely the first job for the new incumbent is to curtail the activities of a government who have no concern over the long-term implications of their actions, and are instead focussed on the short term gain to be had, especially political gain, from making sure that it falls apart on someon else's watch, not theirs.
A very difficult job, one might add.
Can we please have someone, somewhere in the FSA hierarchy who understands how Financial Advisers and their clients interact in the REAL world?
The FSA and their predecessors have decimated Adviser numbers which can scarcely be said to be a consumer benefit.
NO MORE BANKERS please!
Steve
So Mr McCarthy was a 'highly successful' regulator of the energy industry, was he? That'll be the same regulator who's own decisions to re-design the workings of the wholesale markets can be directly linked to the collapse of both British Energy (bailed out by HM Govt) and TXU Energy (which was not).
This man certainly has form and HM Treasury are used to signing cheques in his wake.
Having a banker run the FSA is like having an old lag running the police force.
I suppose its another case of "He who pays the piper calls the tune".
If the FSA is to be an effective watchdog it needs customers running it, not apologists for the companies it is supposed to be moderating.
Having a banker run the FSA is like having an old lag running the police force.
I suppose its another case of "He who pays the piper calls the tune".
If the FSA is to be an effective watchdog it needs customers running it, not apologists for the companies it is supposed to be moderating.
Given the incompetance and self-interest that accompanies byzantine beaurocratic structures like the FSA, the question of which particular muggins occupies the hot seat may not be as important as supposed.
Surely a more important question is where the division of responsibilities between the FSA and the BOE lies?
Is the FSA now seen to be an experiment that has failed? Is it time to give back some of its tasks to the BOE?
We all had high hopes the present Chairman of the FSA would bring about a real basis change, this hasn't happened and in fact under his direction it has turned into a bureacratic nightmare seeking to interfere all ove rteh place irrespective of knowlegde to get things supposedly right where there was nothing wrong.
He should be sorely missed, but wont be not because the FSA can run more than adequately without him but because his presense has produced absolutely nothing; a legacy he really should feel truly embarrased about but doubtless wont.
If reports are that Gordon Brown likes those who aren't of the old school model and are focused on getting results the last thing we need is to replace the present lame duck Chairman with someone from the same organisation.
I would love to stand for the job and would gladly take half the present salary offered but what would be the point when the government is now seeking to control the overide on decision making so handicapping the very nature of good regulation.
How can the FSA be taken seriously when it only goes after the little people?
Billions of pounds earned from Payment Protection insurance and a few millions in fines, same with endowments the list can go on and on.
Under the present regime of regulation and the Chairman in situ, we are left to suspect that crime really does pays big time!
The job isn't that difficult at all but we all are made to think it is so that salaries are kept high.
Its a job like any other dealing with squabbling counterparties all
seeking to protect their interests. That's cool but there needs to be a dispassionate referee who is prepared to cut to the chase,
make things happen and save on the rhetroric, I do that every day!
so do loads of folk in this country, but will we get the opportunity? of course not because we are not sychophants or don't belong to a lodge!.
The world is changing dramatically it's just a shame that regulators appear stuck in another bygone era where rules are only for the "little people".
At least, if nothing else we can rely on the Govenor of the Bank of England to keep us mostly on the straight and narrow through thesse turbulent times even if the Government and the FSA have lost the plot.
So fellas if you want a basis change that gets things done, don't forget to drop me a line!
Sir Callum was alwyas going to retire in 2008. His departure is not connected to the issues surrounding Northern Rock and to try and link the events is cheap journalese.
To michael m, bank regulation is a slippery and treacherous activity, not least since banks have no wish to be themselves regulated, and regulators had their eyes and ears, ie. the supervision units, by which regulators negotiated or reasoned with banks such as NR, put on hold across the sector as a whole - all because banks including NR didn't like regulators poking their noses in and government tried to be business friendly. You can call that patronising, but at the end of the day it's your funeral.
On the question of the FSA however, my money would be on Mr Crosby, not least because he is the only likely candidate with any substantial private experience, but because Halifax Bank of Scotland were also very cooperative with the regulator in my experience, so I'd give him the thumbs up. What he needs though is a brief to go in with the broom and a crack team of Auditors.
There is a fundemental problem when it comes to appointing someone to oversee the goings on in the city and money markets.
The people who run these institutions have no desire to see anyone appointed who is going look too closely at the way they operate and then report back accordingly.
In effect this is a closed shop to outsiders because the power brokers will always make sure only their cronies are selected and to make matters worse the people appointed usually have many such appointments within the city.
That makes it difficult for them to ensure that a proper in depth survey of the practices going on there is carried out and to report back accordingly.
Why has no one commented on the banks etc who are posting massive losses being able to receive large tax rebates?
Robert Peston likes to listen to his own voice when appearing on camera and is so negative that one wants to go out and despair. Why cant he be constructive instead of destructive.
Lets think our way out of this mess and all welcome any help being given.
Great news from the Fed and good luck to them. At least they are trying and not sitting on their hands and wishing for bad news like many of the analysts.