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Identity system; a new focus

At the recent MiFID Forum, the FSA outlined the problems facing the securities industry in complying with the regulatory requirement to implement a unique investor identifier. Various ideas were put forward. These ranged from the use of BIC and SWIFT codes to national health numbers, passports and national insurance numbers but were discarded for obvious weaknesses.

The FSA categorically stated that it does not wish to run any numbering database. This is clearly problematic, as the question of whom or what runs and maintains this database needs to decided. Long before a dialogue on any technology and standard issues ensues. Although I am sure that any problems related to the later are surmountable.

So should the identifier database be run by a Government agency or an existing commercial supplier? Or should it be a co-operative organisation or something new and specifically designed for the purpose?

One thought occurred to me and this was to dust off the Government's contentious and recently abandoned identity system. It works and is available, although it does have an obvious PR downside, with people concerned about privacy. However, if the system was refocused only on investors, this would have an obvious limitation in terms of coverage and should allay public concern. It would look like a different kettle of fish entirely. With approximately 18 million individuals on the UK shareholder register but with less than 3 million dealing more than once a year, the volume is modest. However, foreign investors may need some compatible arrangement with their own national identity system or be introduced into the UK system.

Surely the City could gain some pixie points with the Government for finding a new value for an expensive political flop. In these times of austerity using an existing system makes sense, so why not?  

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