Making the FSA accountable

Some people seem to think this site is just about criticising the FSA - wherever did they get that idea?! What we want is a fair deal with the Financial Services Authority - in a word, accountability.

Most people agree with the principle of having a regulator of finance, but there is widespread concern over the way the FSA will have a very dangerous balance of powers without sufficient restraints. As the Financial Services and Markets Bill is going through the Lords, there is still time to introduce these ten reasonable measures of accountability:

1) Both the practitioners panel and the consumers panel should be independently appointed. In principle, anybody who can prove they represent the industry or consumers and is willing to put in the work should be allowed to serve on the panel. If, in practice, this makes the panels unwieldy, then a random selection from the suitable candidates should be made.

2) If either of these panels makes a firm recommendation to the FSA, the FSA should either adopt it or publicly state the reasons why not.

3) If the panel then feels strongly enough to push the issue, they should be able to call for a brief debate and vote in the House of Commons.

4) The annual public meeting to consider the FSA's report should also be able to vote through firm recommendations. The FSA should then be required to adopt these recommendations or give a public statement why not.

5) The public meeting should also be able to vote on a motion of no-confidence in the FSA Chairman or board of directors.

6) As the FSA can set rules for financial firms (the statements of principle), they should not be able to decide whether a firm has broken those rules. This split between making rules and judging transgressions is a fundamental principle of justice - that is why Parliament and the courts are separate bodies. The FSA's powers should be limited to identifying cases where a firm is alleged to have broken the rules and then preparing evidence before the case is independently judged.

7) Complaints about the FSA should go directly to the independent investigator instead of being 'filtered' by the FSA. If the investigator finds against the FSA, they must have the powers to make the FSA put right their errors and make any necessary financial compensation.

8) The FSA's legal immunity should be limited to what is necessary for them to carry out their tasks. In particular, their immunity should not apply in cases of recklessness or negligence.

9) There should be two annual reviews of the FSA. Parliament must be allowed a full review of the FSA's policy decisions and activity with the power to demand any changes it feels are necessary.

10) A suitable organisation such as the National Audit Office must review the FSA's financial efficiency. Just because the public pays for the FSA indirectly (through fees charged to finance firms which are passed on to consumers) doesn't mean the FSA should be unaccountable.

For more details on the FSA's powers, click here. This site also has quotes about the FSA, addresses and other interesting details of the FSA board, and some interesting facts about the FSA's operations.

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