Of course, regulators are not to blame for the actions of those at Barclays and elsewhere. However, we need to question the narrative that this problem all began with “deregulation” and then the development of “light-touch regulation” under Gordon Brown.

Given the millions of paragraphs of financial regulation and the existence of more than 3,000 compliance officers at large banks such as HSBC, we can dismiss the idea that we have light-touch regulation. But, those who suggest that there has been deregulation are not wholly wrong. More things are permitted these days – but those things that are permitted are more highly regulated.

The key question though is not how much regulation there is, but “who regulates?” Perhaps the most important change in the 1980s was not deregulation, but a move from regulatory institutions that emerged within the marketplace to statutory regulation.

When Elinor Ostrom, the late Nobel Laureate, visited the Institute of Economic Affairs last March, she was interested in the analogy between financial regulation emerging in the market and community management of environmental resources. She was fascinated by the fact that, when the stock exchange first started in a coffee shop, those who did not settle their accounts were put on a board under the heading “lame duck”; the exchange expelled people for bad behaviour; and it made the rules for companies that wanted a listing and for individuals and companies involved in trading. In order to prevent conflicts of interest, on the London exchange, companies could not trade on their own book and also give advice to clients. The motto became “my word is my bond” and the untrustworthy would not get business. This all ended with a transfer of regulatory authority to the state.

This article originally appeared in City AM. You can continue reading here.