The dynamic chief executive of the Financial Services Authority (FSA), John Tiner, was in Dublin on February 15th to talk about competitiveness in regulation at the Institute of European Affairs.
Tiner joined the FSA six years ago, as managing director of the consumer, investment and insurance directorate, following a 25 year career at Arthur Andersen, which saw him head the firm's world-wide financial services practice. Tiner has recently announced his intention to become a 'gamekeeper turned poacher', as he is returning to the private sector in July.
He says he came into regulation to see if he could make it more sensible, and has had, 'some success and some frustration'. He told the audience that what incentivises policy makers is making policy - and what he has tried to do in his role as chief executive is to reverse this, and to get rid of redundant policy.
Regarding competition in regulation, he pointed to the fact that although the FSA doesn't have an official competitiveness remit, three of its seven guiding principles of regulation focus on competitive issues such as barriers to entry and innovation. Moreover, he thinks regulators should foster competition and innovation.
Pragmatism infuses Tiner's approach to regulation, and he doesn't stand for those who say that regulator should focus on preventing market failures. 'In a free market failures should occur, and policy makers need to accept this,' he says.
A risk based regulator, the FSA regulates 28,000 companies in the UK, but only sees 25,000 of them every 10-15 years, as efforts are concentrated on the firms that pose the biggest threat to stability.
Referring to the on-going global debate over whether hedge funds should be regulated or not, a debate which recently reached the level of the G7, Tiner said that the FSA currently regulates around 250 hedge fund managers. Although it doesn't have regulatory reach over the funds that are being managed, the FSA does a six month survey of prime brokers to assess the degree of leverage.
Paying tribute to Tiner, Pat Farrell, chief executive of the Irish Banking Federation, who was also on the panel, remarked that he shifted the focus towards principles from markets, and while he tried to protect consumers, he also attracted investment and enhanced market efficiency.
Farrell echoed Tiner's remarks regarding the burden of redundant regulation, saying, 'I strongly believe that in today's climate in Ireland regulations should only be introduced when and where necessary and be sufficient for the tasks at hand. |
