Do you remember the 1980s movie Clash of the Titans? The gods had a fearsome, apparently invincible, sea creature called the Kraken which they had released but could not control.
The Financial Services and Markets Bill leant very heavily on a Fabian Society pamphlet written by Ed Balls in 1992. New Labour subsequently proposed a new committee under ex-Treasury permanent secretary Lord Burns. As a witness, I felt that the Treasury and its ministers had already decided the final bill and the Burns committee just existed to endorse it. The Act was very vague about accountability, creating an ideal structure for burying Treasury errors – ask the victims of Equitable Life.
So let us fast forward to 9 March 2011 and a meeting of the Treasury select committee during which former FSA chief executive Hector Sants was questioned on accountability. “We are currently operating to our FSMA framework and I’m not aware that the FSMA framework, which parliament set up, vested powers in this committee of direction over the FSA as an independent regulator; I believe parliament was setting up an independent regulator”.
Allow me to translate Hector Sants’ words: “You politicians passed the Financial Services and Markets Act which has given us unlimited power. We can tax our industry as we see fit and so while government departments were expected to cut their budgets by 35 per cent we will increase ours by 33 per cent
“Yeah, Treasury select committee – we will show up to your meetings ill-prepared and will blank anything you ask that looks vaguely forensic. If we listen to anyone, it’s the Treasury, so when push comes to shove you elected minions do not matter.”
In a democracy we cannot have a body that can tax, remove your livelihood and destroy the value of your business at a whim without any meaningful political oversight. The FCA can kick major scandals such as that of the Royal Bank of Scotland into the long grass by refusing timely information to our elected representatives and there is nothing that can be done.
It is time to curb the power of the FCA and this election year is the time to do it. So what are Apfa plans?
So back to the Kraken; Perseus killed it with a handful of supporters and some enthusiasm. Do IFAs have the drive to demand change – and where is my Medusa’s head?
Garry Heath is editor of the Heath Report and former director general of the IFA Association.