I suspect the memorable phrase coined today by Hector Sants, CEO of the Financial Services Authority, will long be remembered as a turning point in the debate about regulatory structure.
He said "a principles-based approach does not work with participants who have no principles".
Go to http://www.ft.com/cms/s/0/2dbf2b7e-0ef8-11de-ba10-0000779fd2ac.html for good coverage.
The debate about principles vs. rules is rather sterile - what counts is effectiveness. Sants made this very clear - they are going to focus on outcomes.
The FSA will publish a report on March 18th proposing changes to the UK regulatory system. Cant wait.
Another choice quote from Sants today: "There is a view that people are not frightened of the FSA. I can assure you that this is a view I am determined to correct. People should be very frightened of the FSA"
In the City, corruption drips like honey. It oozes out of every dealing room floor. If the boys in braces aren't frightened it's for good reason. Feathering one's own nest has become an institutionalised past-time. Let's see if Mr Sants can deliver on his promise.
Accountability?
Actions would need to be indelibly linked to actors. I'm not sure the appropriate processes are in place to achieve this.
To enjoy the fruits of illicit actions, the actor has to have a way to collect their booty. Clearly that is too easy currently.
© Finextra Research 2015