Comment: Regulators must follow through on tough talk

IT’s not quite time to say goodbye to the much-maligned Financial Services Authority, but the welcome mat is being laid out for its successors, which promise to be better regulators.

Government ministers are talking of a tougher, stronger and more robust approach to supervising the financial services industry and they believe the new regime, which ushers in two new bodies, will be just the thing we need to avoid the mistakes of the past.

Well, let’s give it a year or so to bed down before the rocks start flying, as surely they will. The trouble with defences is that however strongly they are built, someone or something has the means to breach them.

The authorities promise a different, more judgmental approach so that the regulators will be more hands-on in telling those running the financial services companies what needs to be done, particularly when they don’t like what they see.

But it will require strong personalities to order some of the most 
powerful players in the City to make changes. Getting tough, also means being prepared for the odd showdown, and that may prove the real test of the new system.

The Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) will have specific roles in monitoring what goes on in the industry and protecting customer interests. A big worry remains that it will allow them to blame each other when the next crisis occurs.

Financial services minister Greg Clark told a conference yesterday that a strong regulatory system would help promote competition, and it will go some way to doing so if it encourages customers to switch accounts and makes it easier for new entrants to enter the market and flourish.

But it will take more than a new set of rules to build a competitive and wholesome financial services sector. Let’s not forget that size also matters and, as we saw with Barclays’ swoop on ING Direct, the market rather than the regulator will decide who gets to play in this particular game.

FCA boss Martin Wheatley is leading from the front and says it will have more tools to help fix problems than were available to the FSA, so more power should give it more control, though it won’t mean much if it proves to be slow in identifying problems ahead.

Business as usual as Chanel snaps up Barrie

a HAPPY outcome in the Dawson International crisis: luxury global brand Chanel is to be the new owner of the Barrie Knitwear factory in Hawick. The deal brings a touch of glamour to the Borders town but, more importantly, safeguards the 176 jobs that were at risk when the administrator was brought in on 15 August.

The emergence of Chanel is perhaps not such a big surprise as the two organisations have been partners for a quarter of a century.

The new tie-up, however, is a firm endorsement of the quality of Barrie’s work and the broader Scottish textiles industry, which in spite of its diminished scale remains globally valued.

It looks like the terms of the deal will allow the management to remain in place and for little else to change, which is probably as good a reason as any for Chanel to buy the business.

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