Own goal – again!
Article Type: Editorial From: Journal of Financial Crime, Volume 17, Issue 1
Over the last couple of months it has become clear that if the conservatives form the next government in the UK there will be significant changes to the structure of supervision and perhaps regulation over the financial sector. In particular, the Financial Services Authority (FSA) will be recast and its prudential and regulatory responsibilities over banks and certain other financial institutions transferred back to the Bank of England. It remains unclear what will happen to the FSA's role in reducing financial crime and in particular policing the financial sector. While the FSA has now renounced its “soft” approach to its statutory policing obligations and has more or less given up on civil enforcement and reasserted the role of the criminal law in combating insider dealing, this is probably too late to impress those who will be making the decisions in the next government. While the FSA has in particular over the last couple of years shown much greater willingness to test and evaluate its approaches, the recent burst of activity is probably– in political terms, too little too late. As successive editorials in this journal have emphasised, the FSA has failed to achieve credibility in policing the markets, not with standing the sterling efforts of people like Philip Robinson and Margaret Cole.
The future of the Serious Fraud Office (SFO) in a new political landscape is also uncertain – but perhaps rather less deservedly so. Under its new director, considerable changes have been introduced in the way in which it executes its statutory mandate and while not without its critics, the general view is that things have improved. Having said this, it is unlikely that the SFO will remain as it is if a conservative government comes into office. The present government has done a great deal in terms of legislation, launching new initiatives and recasting structures to address financial crime and in particular fraud. It is far too early to evaluate the success of much of what has been more or less implemented. Indeed, it is in many respects sad that it is unlikely that what has been put in place will be allowed a sufficient opportunity to bear fruit. While conservative plans are still being worked out in regard to financial crime, it is probable that there will be a major re-structuring. Some would like to see the creation of a dedicated super anti-financial crime agency subsuming the many different agencies that now exist. While such an approach has much to commend – and was in fact first advocated by the present author in 1974, there are difficulties. For example,would such an agency have primacy in addressing issues of corruption? Would it lead on the interdiction of criminal property? What would be its relationship to the FIU? Would its mandate be confined to the traditional criminal justice system? While it is to be hoped that those that think about such things in the Tory Party have taken these and many other issues on board – we will have to wait and see.
Perhaps, the most serious practical issue is that all this does nothing for the morale of those in post and recruitment. The FSA has never found it particularly easy to recruit good people for its enforcement role and has had difficulty in retaining those it has been successful in “borrowing”from other institutions. It has been reported in the press that now that the FSA as an organisation appears to be under a death sentence, the situation has become even worse. The way in which the conservatives have handled this is irresponsible and damaging. The morale of those involved in this type of work which is both difficult and often frustrating and certainly not career enhancing, is of critical significance. At a time when confidence in the way in which we have minded other people's wealth is so low, can it be sensible to undermine further those charged with protecting integrity and pursuing criminals? Of course, it is right and proper for prospective governments to reveal their intentions – and what is being considered may not be disadvantageous, but the manner in which this has occurred does indicate at best a lack of sensitivity and understanding. Let us hope there is greater maturity and wisdom in government.
24 September 2009.
Barry A.K. Rider
