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FSA should adopt 'referee' role

Date: Fri, 04 Apr 03 Analysis

The financial editor of The Times business supplement, Graham Searjeant, has today argued that the City needs the FSA to 'turn over a new leaf' and assume a less interfering mantle.

Concerned that the new head of the FSA, Callum McCarthy will run the regulator in a similar intervening fashion as the energy watchdog he currently presides over, Mr. Searjeant stated the FSA should act like a referee, 'stopping producers from making fouls, indulging in dangerous play or making fools of consumers.'

The business editor perceives Mr. McCarthy's tenure at Ofgem as destabilising for the industry, generating major losses and unsustainable price reductions (unlike the government who judge Mr. McCarthy's reign a success), and suggests that any negative consequences in the financial sector will have repercussions far broader in scope.

'If Mr. McCarthy pursues the interfering line that so many seem to wish upon him, he may well preside over the same sort of corporate financial disasters that have littered the power industry,' Mr Sergeant argued. 'The difference is that when financial companies fail, or subside like Equitable Life, lights do go out.'

Top of the FSA's agenda should be to shore up certain sections of the financial industry, in particular life insurance, which have been brutalised by the three-year bear market.

'The need is to restore confidence in the industry and its products, not by damning its past performance and strapping it to a production line of reform, but by working with the industry and its owners to strengthen its finances,' Mr. Searjeant concluded.

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