Be very afraid…

hammerThe Hammer House of Financial Horrors comes to town this week with Hector’s comment (Financial Services Authority CEO) that banks should be ‘very afraid’ of the new rules they can expect.

There is an interesting analysis of this at Management Today. Is this a case of the FSA jumping on the bandwagon they think they need to be on? If so, that is no better than saying everything’s basically okay. As my colleague Philip Cullum said to me, neither position indicates real reflection on what went wrong and what didn’t, and what this means in terms of how they operate now. Principles-based regulation per se did not cause the current problems; on the other hand, the FSA’s view that the only people it could learn from were other financial service regulators and the industry was clearly myopic.

Adair Turner, the FSA Chairman, is due to report on what he thinks the lessons are. I hope he is the right man, along with Hector Sants, to repair the regulatory system. But the financial turmoil is far from complete in terms of its effects on us all and the most we can hope for is no more horrors please.

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