Sleeping Watchdogs


























Sleeping Watchdogs


The Myth of Regulatory Failure: the FSA

In connection with the banking crisis, the regulatory framework in the US and Britain has been described as loose and hands-off and stands accused of failing to curtail the gambling antics of the banks.

In the first instance, regulation was set up as a PR exercise by governments, afterall, sound banking required a watchdog to keep everyone honest, apparently. When governments became aware that something was wrong, their regulators didn't have the expertise to discover what was going on in the banks. The banks were employing mathematicians with complex computer models to gamble on anything that moved; they even gambled on changes in the cube root of inter-bank interest rates, totally bizarre, and totally beyond the grasp of your average regulator. The Bank of England itself spent £80 million in 2008 on consultants in an attempt to comprehend how casino banking worked or didn't work as it turned out.

Just because the Financial Services Agency was useless, we should not conclude that all regulators are a waste of money. Where would we be without The Office of Fair Trading reminding us how tricky and rotten much of the business community can be. Take the case of Ryanair, told by the the OFT to stop charging a £6 fee to customers using their debit cards to book flights, on the grounds that a debit card equaled cash. Ryanair's response, an across the board £6 admin fee to cover 'website costs' and a 2% fee for anyone using a credit card. Ryanair with its usual audacity blamed the OFT for forcing the company to apply these new fees. In July, 2012, eleven other airline companies were told they could not charge a fee to customers paying by debit card. We don't know what tricks they will employ to get these unfair payments back into their coffers. Unfortunately, most airlines are not as openly arrogant and abusively dismissive of their customers as Michael O'Leary's Ryanair.

British Regulators Are Just No Good at Regulating

The List of shame:

Barclays forced to pay $360m over its manipulation of Libor,
HSBC fined $1.7bn for money-laundering,
Standard Chartered made to pay $667m over breach in sanction laws,
BP penalised $4.5bn for criminal damage and regulatory failings over the oil rig explosion in the Gulf of Mexico,
GlaxoSmithKline fined $3bn for selling anti-depressants for unapproved uses on children,
RBS awaiting a big fine over Libor fixing,
Rolls-Royce under investigation for allegations of bribery
Johnson and Johnson big payments pending for failed hip replacement failures

All these companies have been sanctioned for their criminality but not by British regulators. (It's true that the FSA fined Barclays £59m but we can only wonder how that number was arrived at? Indeed, has anyone actually worked out how much the distortion of Libor cost the economy?) Light touch is one thing but looking the other way when criminality is taking place is downright Blarite, bending over for the City, bending over for the neoliberals across the pond, just bending over in awe to the new robber barons in the hope that they might set up shop in your back yard.


The powers (sic) of the FSA are being transferred by the Coalition government to the Bank of England in an attempt to persuade anyone who's interested that the government are serious about dealing with corporate criminality.

The Press Complaints Commission (PCC): Leveson and beyond

The PCC was put in place (1990) to maintain high ethical standards of journalism and to promote press freedom, in repsonse to a threat of statutory regulation, following appalling behaviour from some parts of the print media. Oddly enough, the Press Council (1953) was set up with the same remit, for the same reasons. In both cases the press were given a span of time to get their house in order and no statutory regulation came to pass.

Historically, in terms of the PCC, not so long ago, at least two Select Committees, in 2003 and 2007, told us how fine the press was, and in 2009, a Select Committee report into "Press Standards, Privacy and Libel" stated that "self-regulation of the press is greatly perferable to statutory regulation, and should continue".

At the British Press Awards in April 2008 our leader Dave said:

“We’ve no plans to change self-regulation. I think the PCC has settled down and the system is now working better than it once did. But that’s not to say that there isn’t an on-going need to make sure the press acts responsibly”.

Whose job was it to make sure the press acted responsibly, that's right the PCC, who did nothing about the excesses of the The Sun and The News of the World.

And here we are in 2012, post-Leveson enquiry, asking the press to form yet another body to take on the role of self-regulation and no doubt, Dave will be telling them that if they don't get it right, then they can expect statutory regulation, blah, blah.

And meanwhile all the press corps will be busy telling us what John Milton said about press freedom in 1644, all that stuff about the individual being capable of using reason to distinguish right from wrong, good from bad without any help from the censor.

The bottom line is that the PCC has much in common with the FSA, both did not do their jobs but they were never expected to do their jobs effectively.

Regulating the markets

The Office of Fair Trading, OFT, a quango set up in 1973 tells us:

"The OFT's mission is to make markets work well for consumers. We achieve this by promoting and protecting consumer interests throughout the UK, while ensuring that businesses are fair and competitive." (OFT website)

The Competition Commission

"The Competition Commission (CC) is an independent public body, (i.e. another quango) which helps to ensure healthy competition between companies in the UK for the ultimate benefit of consumers and the economy." (CC website)

The CC came into being in 1999, replacing the Monopolies and Mergers Commission. The CC is not a regulator, it investigates following concerns raised by the regulators. It does have the power to stop mergers and remedy likely uncompetitive outcomes of mergers. Most of its references come from the OFT but also from Ofwat, Ofgem, Ofcom and the CAA, etc. That's an awful lot of regulators looking out for the consumer, on the look out for shifty Del Boys - then how do we explain the continued shape shifting criminal behaviour of a shameless business class.

Often, however, the misdeeds and trickery of business do not fall within the remit of the regulators, like the Poundland trick of reducing the amount or size of products whilst producing packaging suggesting that extra is being provided. Or where banks use their own inefficency, using their customers' money without paying any recompence, as in the case of ISA transfers, that should take a matter of days at most but mysteriously the money disappears for months on end before being transferred.

The Care Quality Commission (CQC)

Many organisations scrutinise aspects of the NHS and Social Care. Including the following:

Monitor - the regulator for foundation trusts
NHS Litigation Authority – risk management standards
NICE (National Institute for Health & Clinical Excellence) - guidance and quality standards
Connecting for Health – information governance and records management
MHRA (Medicine and Health Care Products Regulatory Agency) – for patient safety and medical devices alerts
HQIP (Healthcare Quality Improvement Partnership) – clinical audit
OfSTED – for child safeguarding
NHS Employers – for NHS employment check standards

As a society we seem to have created a regulator or watchdog for every activity but what about decent care. The CQC is supposed to police what's happening in hospitals, care homes and more, but the abuse continues. It's no good the CQC telling us in its latest report that all is not well in the care industry like ‘one in 10 patients are denied respect and dignity, 15 per cent are not fed properly and 20 per cent have their care and welfare neglected’, if it does sod all about it. The CQC's contribution to healthcare across the land has been minimal since it came into being.

Health regulation was left in tatters after over a thousand patients died at Stafford Hospital between 2005 and 2009 having suffered neglect, indignity and shoddy care: all of the regulator's box ticking demands did little to ensure quality healthcare in this case. Then we had the Winterbourne View care home scandal, where a whistleblower’s information was ignored. We saw the head of the CQC replaced and a new 'patient focus', more box ticking and the public are supposed to be reassured