The Very Model of a Modern Regulator?

Callum McCarthy looks back on two years at the helm of the Financial Services Authority, and describes the three strands that will shape its future work.
I have been at the Financial Services Authority (FSA) for two years now, though it seems, depending on the events of a particular day, like either the blink of an eye or a lifetime – an indication of the business of the FSA, and its very wide agenda.
Indeed the size of our responsibilities runs wider than any other financial regulator, in terms of both sectoral range – banking, insurance, securities, fund management, markets, retail finance and listing duties – and international reach. For example, of the 360 banks we supervise, more than two-thirds are incorporated outside the United Kingdom, and include the world headquarters of some of the biggest global banking operations.
We are responsible for international policies, like the new definition of capital requirements for banks and investment firms – now finally brought to conclusion by the Basel Committee and being translated for the European Union in the form of the Capital Requirements Directive. This may sound like an academic exercise until you recognize that banking crises typically result in a one-off cost to a country of about a fifth of its annual GDP. We are also responsible for work within a European context on directives covering investment services, prospectuses, market abuse; for policies aimed at preventing financial crime; for work to reform the accounting and regulation of insurance; and for managing the new mortgage and general insurance responsibilities given to us, which brought an extra 14,000 firms within our scope.
I could go on, but won’t. My point is that it is easy to see the FSA as the source of a constant stream of activities, and to miss the overall shape or central policy that connects them.
Let me set out the big picture. Cutting through all the individual initiatives, programmes and projects, there are three strands to our work. Firstly, to ensure there are efficient, orderly and fair markets; secondly, to help the retail customer get a fair deal; and thirdly, to improve our business capability and effectiveness – that is, to make the FSA easier to deal with. Let me deal with each in turn.
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