Was it sensible of Shadow Chancellor George Osborne to announce publicly that, if and when the Conservatives win the next election - no later than a few months away - one of the first actions they will take will be to abolish the FSA?

It is likely that the Shadow Chancellor believed that this would be seen as a popular action, given the public desire for a scapegoat for the Northern Rock fiasco and recognition that the current tripartite arrangement hasn’t worked.

Given the state of the opinion polls, which predict at least the end of the Labour Government, if not a win for the Conservatives, most commentators have concluded that the FSA will be abolished in around 150 days. Therefore, with his ill-timed announcement, Mr Osborne announced to the world that the FSA’s life, and therefore authority, is finite - in effect, it is a dead regulator walking.

In reality, the FSA’s HQ at Canary Wharf and 90 per cent of its staff will continue to regulate the industry in some form, almost certainly with another name on the North Colonnade offices and, on balance, regrettably with a new set of leaders dancing to a slightly different tune.

However, because the FSA now has a termination notice hanging over it, its influence has been dramatically curtailed and, therefore, the UK’s negotiating position has been especially weakened. The UK is a global leader in finance, so to have the regulator effectively neutered, while asking it to provide leadership, especially in the EU forum, will delight many of our European competitors as they watch with schadenfreude. 

A weak regulator is a concern for the whole UK market because having a robust and clear regulatory framework is one of the major infrastructure requirements in order for a city to become a global financial world class centre.

Understandably, with uncertainty over its future, the organisation is having trouble recruiting new staff, particularly at senior level, who are no longer sure whether they will have a role post-May or, if they do have one, whether it will be with the body they applied to.

The Shadow Chancellor should have thought harder about the effect of his announcement. Perhaps he should have taken a lesson from the last Shadow Chancellor, who remained silent about his dramatic changes to the Bank of England until he was in office and appreciated that sometimes it is better to be discreet and right, rather than populist but naïve. n

Retail Distribution Review endorses membership of a professional body
The latest FSA consultation paper on the Retail Distribution Review is a ringing endorsement for membership of a professional body and, for the first time, a strong encouragement for individuals to become members.

It is clear that, had not the Human Rights Act intervened, the FSA would have further recommended mandatory membership. However, it has strongly encouraged individuals, both by exhortation and by practical incentive, to become members.

For example, the FSA suggests proposing a new rule requiring all firms to certify independently that their staff are up to date with, and have maintained, their technical competence (through CPD). However, it will regard membership of a recognised professional body as a “safe harbour” and as evidential provision that the individual has met the required criteria.

It is also excellent news that additional fields will be added to the FSA’s register of authorised persons, including qualifications held and to which professional body, if any, the individual belongs. The FSA will also go the extra mile and explicitly encourage the public to seek advice from someone who is a member rather than a non member.

At last, members of the Chartered Institute for Securities & Investment can be proud to call themselves professionals, and be prouder still that their professionalism is being very publicly recognised. n