Newspaper article The Evening Standard (London, England)

Let's Not Rush to Over-Regulate

Newspaper article The Evening Standard (London, England)

Let's Not Rush to Over-Regulate

Article excerpt


MARKETING folk tell you the reputation of a company is not destroyed bythe mistakes it makes, but by the way it recovers having made one.

People are not surprised when things go wrong. It happens. But if a businessshows genuine remorse, seeks immediately and without argument to put right thewrong and takes steps to make sure it does not happen again, the chances are itwill emerge with its reputation enhanced rather than damaged.

But if it argues and wriggles, seeks to avoid responsibility or pass the blameonto someone else, it fools no one and is never thought of as highly again..

By these yardsticks the Financial Services Authority ought by now to be gettingsome credit. It was caught out by Northern Rock, but it admitted as much andput in place a plan for improvement.

In its annual report published yesterday chief executive Hector Sants claimsthat since Northern Rock last August the regulator has performed well. It hasensured the institutions it supervises have reacted immediately and effectivelyto ever-changing market conditions and intensified its engagement withindividual banks so it has been on top of any emerging problems.

Overall, it has demonstrated it has the ability to operate swiftly and flexiblyin a time of turmoil and that, says Sants, is an excellent model for thefuture.

He has a point. Perhaps when there is a mistake a tougher standard is set forregulators. But the last thing London needs is a regime structured to avoidfailure at all costs. It would be the equivalent of imposing a 10 mph speedlimit on the motorways to avoid fatal accidents.

It would work, but would defeat the point of having the motorways.

Most people will accept this. But in the heat of the moment, or under politicalpressure, or out of opportunism, or perhaps even to settle some old score theyuse the mistake as a crowbar to deliver wrenching change. In the past whendoctors did not understand the diseases they were treating they managed to killtheir patients. Politicians too often behave like ancient doctors.

This is the real worry for London. …

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