Financial Regulators: Examinations

Lord Sharkey Excerpts

Monday 22nd October 2012 Lords Chamber

[Lord Sassoon]

My Lords, as well as getting the architecture of supervision and regulation right—on which this House has rightly spent many hours and to which the noble Lord, Lord Peston, has made some important contributions—the Government should within that appoint to those bodies an appropriate board with appropriate expertise and experience. It would then rightfully be up to the two successor bodies to the FSA to decide how to equip their staff properly to do the job. The FSA’s approach to testing and competence will be continued by the FCA. The FCA is also exploring whether to have training externally accredited, which the FSA has not done up to this point. The PRA, on the other side, is developing a comprehensive strategy, including a three-year training programme for new graduates. These matters are therefore being taken extremely seriously by both the successor bodies, which is how it should be.

[Lord Sharkey]

My Lords, it seems clear that the FSA was blind to the moral and ethical failings of the banks as well as to their regulatory failings. How will the FCA do better in this respect? It is all very well worrying about the locks on the stable door, but should we not also be worried about the mindset of the horse?

[Lord Sassoon]

My Lords, one of the things that is very striking about the FSA is the speed with which it put in place an inquiry into what had gone wrong on Northern Rock. It was very frank about its failings and has changed an awful lot of things already. One should be fair to the FSA and recognise that it acknowledged the failings of its supervisory regime, which is already reflected in differences to its approach to training and continual assessment.