A letter from John Browne, the head of Strategic Advantage, our UK partner, was published in The Financial Times Adviser last Thursday. John writes:
“The ding-dong between practitioners and regulators seems to drag on forever. The pages of Financial Adviser show that the age-old arguments and entrenched positions are continually repeated and remain unresolved.
It is blatantly obvious that there is something fundamentally wrong at the very heart of regulation. It has the wrong purpose. As a reader, but industry outsider, let me have a go at a solution.
The problem is that the same thinking that created the current regulatory framework – you know, the one that has failed the nation - is now being used to create and staff a so-called new regulatory model. Here we go again.
The consequences are dire. It is imperative that the government, regulated firms and the general public are crystal clear on the overarching purpose of regulation which should be ‘to enhance and protect the reputation of the financial services sector, the City and, ultimately, the UK.’
Reputation has little to do with PR and spin. [Among other things], reputation is about the behaviour of management; the reality of how industry and regulator staff behave and how they manage risks. It is clear from the past few weeks' events that government ministers, regulators and senior financial services managers have no intention of changing their behaviours, whatever they may say. That fact is reinforced daily throughout the sector (rewards and pensions for failure, as I write).
Instead of treating reputation as the industry’s most valuable asset, regulators strengthen their position as "rule enforcers" and industry chiefs live in the world of spin and damage limitation.
With a fresh regulatory purpose, focused on reputation, the FSA and the industry stand a fighting chance of getting the strategy right and rebuilding the public’s trust that has been squandered. Without a reputation focus we are in trouble. UK plc has little else to fall back on if you guys go down.”
As published on www.ftadvisor.com, Thursday, March 12, 2009