FSA needs serious debate
MARTIN DICKSON
LOMBARD

Tony Blair's attack on City regulator
Who needs enemies when you have friends like these? Tony Blair, the head of the government that created the Financial Services Authority, has seemingly laid into the regulator in a speech complaining that it was seen as "hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone".
The attack is so curious that one wonders whether Mr Blair - or the speechwriting scribblers who composed his words - actually meant
what was said. It is odd to suddenly come out and damn one of your most important creations with a sweeping, throwaway sentence in a lengthy address. And the criticism contrasts sharply with the view from the Treasury, which drafted the legislation creating the FSA, and regards .its regime as "world class".
Could this - and the leaking of a letter of complaint from Callum McCarthy, the FSA chairman, to the prime minister - be yet another manifestation of Blair-Brown rivalry?
Whatever the answer, the most important question is whether the prime minister's criticism of the FSA is fair, and it is not.
The new UK regulatory regime, boldly leading the world's leading markets in creating a single regulator rather than a patchwork of self-regulating bodies, is still in its infancy and needs time to settle before judging whether its responsibilities can best be performed under one roof.
But the initial impressions are not
too discouraging. A succession of reports have been fairly complementary about the FSA's regime, particularly when compared with continental countries, where regulators are regarded as less independent, and the US, where there is a patchwork of regulation, which tends to be much more rules-based.
The recent Hampton report on curbing the cost of regulation was complimentary about the efficiency of the FSA's one-stop shop and risk-profiling system.
The FSA is hardly beyond criticism.
Its enforcement system was shown in a very bad light in the Legal & General case and clearly needs a shake-up. And City surveys constantly point up complaints about the costs of compliance, staff quality, bureaucracy and a stifling of innovation.
But the FSA is at least willing to debate issues, and take corrective action, as with its reviews of compliance costs and enforcement.
Mr Blair's criticism appears simply to mirror the complaints about costs
and bureaucracy of the financial services industry - that wonderful machine that brought us pensions and endowment misselling, not to mention precipice bonds and the split capital trusts affair. There is a balance to be struck in regulation, between consumer protection and industry freedom, and the costs may be offset by benefits not just to consumers, but to a market's reputation and ability to attract capital. These issues need debate, not sweeping soundbites.