Compliance Monitor
Tools of deterrence
"Credible deterrence: here to stay," was the truculent title of the FSA's Enforcement Conference back in July. We've been warned. Adam Samuel examines the historical context of financial services enforcement and the arsenal of weapons that may be wielded by the regulator.
Adam Samuel BA LLM DipPFS MCISI FCIArb Certs CII (MP&ER) Barrister and Attorney may be contacted at AdamSamuel@aol.com. His book, 'Complaints and Compensation: a Guide to the Financial Services Market', is available from his website, www.adamsamuel.com.
Amid all the material pouring out of the FSA about the Financial Conduct Authority, two themes seem constant: a continuation of 'credible deterrence' and an increase in early intervention. While early interference with dud products such as payment protection insurance is designed to preclude repeats of regulatory failures experienced since 1988, it also forms part of credible deterrence. The cost of developing banned products and the bad publicity involved is designed to put companies off creating products or services that are likely to do more harm than good. This is reinforced by the gradual FSA development of the regulation of product manufacture. In practice, it is unlikely that the FCA will do much product prohibition. It hopes that the threat will suffice.