FSA Attacks Blair Over Deregulatory Speech

by Robin Pilgrim, LawAndTax-News.com, London

09 June 2005

The Chairman of the UK's Financial Services Authority has attacked Prime Minister Tony Blair over a speech in which he said the regulator was 'hugely inhibiting of efficient business'.

Mr Blair's told think tank the Institute of Public Policy Research last week that many aspects of life in the UK are over-regulated: "Something is seriously awry when . . . the Financial Services Authority that was established to provide clear guidelines and rules for the financial services sector and to protect the consumer against the fraudulent, is seen as hugely inhibiting of efficient business by perfectly respectable companies that have never defrauded anyone; when pensions protection inflates dramatically the cost of selling pensions to middle-income people.

Callum McCarthy, the chairman of the FSA, wrote to Tony Blair on Monday to protest, saying that the remark had undermined the authority of the regulator: "It is damaging to our influence and our abilities to support the principles of better regulation to be described in the way that has occurred, hence our anxiety to establish whether there is any evidence to support the claim, which appears to be unfounded."

McCarthy has requested a meeting with the authors of Blair's speech (thought to be two former think-tank heads) to ask if there is any evidence that the FSA has inhibited companies, and has also offered to brief the Prime Minister to explain the FSA's role.

The FSA was established by Gordon Brown's Treasury in the Labour government's first term by bringing together a number of sectoral regulatory bodies, and has frequently been criticized by its 'clients' as being bureaucratic and heavy-handed. Regulatory costs have ballooned under the FSA, although this is partly due to increased awareness of money-laundering and terrorist financing.

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