Does Britain need a financial regulator?
In 1997 Gordon Brown removed the so-called “self-regulatory” system for financial services under the Securities and Investment Board and created the Financial Services Authority (FSA). The name is all; in fact the “self-regulatory” system consisted of regulatory monopolies ultimately responsible to the Treasury which were a million miles away from market-based regulation which springs up whenever there is a need for it. We forget that before the creation of the “self-regulatory” system in 1986, regulation of investment markets was undertaken by private bodies – and that they were very successful.
Predictably, the FSA has grown into a monstrous gung-ho state monopoly. It has powers to bankrupt and destroy individuals and financial firms in ways that are arguably outside the rule of law. Whilst the Stock Exchange’s motto was “My word is my bond”, the FSA’s appears to be “The more the better” as it hails chalking up “successes” or “results” and writes rule-book after rule-book with no economic rationale for its bureaucratic approach…