Editorial

Citation

Rider, B. (2009), "Editorial", Journal of Financial Crime, Vol. 16 No. 4. https://doi.org/10.1108/jfc.2009.30916daa.001

Editorial

Article Type: Editorial From: Journal of Financial Crime, Volume 16, Issue 4

One of the issues behind the tension in the relationship between the Treasury, Bank of England and the Financial Services Authority (FSA) in how to take their responsibilities in promoting stability and integrity in the financial sector forward, is a dispute, which has manifested itself at various levels with the organisations as to the competence, specialised knowledge and experience of their staff. Of course, this is a matter that so far it has not been in the interests of any member of the “tripod” to make much of in public. It has also not been grasped in the way in might at the political level, given the political class' preoccupation with the next revelation of abuse or grass incompetence in the pages of the Telegraph.

The issue of specialisation and expertise has always been a somewhat sensitive issue in the FSA and its precursors. Indeed, in the early days of the SIB there was real debate as to whether it was necessary to have a general counsel that had any knowledge about the financial sector let alone financial law. The same devotion to the “cult of gifted amateur” has manifested itself not only in regard to legal advice, but also until relatively recently many other areas of responsibility – including enforcement and prudential supervision. Of course, one of the justifications for an agency such as the FSA sitting as it does outside the proper civil service is that you can recruit on different pay and terms. It is certainly true that, over the years, the FSA has recruited a number of persons who you would not expect to encounter in the halls of the treasury or for that matter the bank. However, it would be generous to take the view that this is solely an issue of pay and conditions. The FSA has been prepared to acquire and promote individuals with frankly little practical knowledge and questionable skills and qualifications to key positions. It is, perhaps, hardly surprising that those who have been acquired at lesser runs of the ladder are relatively even less impressive. This has been exacerbated by high turnover in certain functions and poor morale.

The FSA's enforcement function under Margaret Cole has and continues to distinguish itself and this has itself created pressures on others within the FSA. For example, it has long been questioned whether there is any need for a financial crime team outside enforcement. Of course, the reduction in financial crime by and through authorised persons is one of the FSA's statutory mandates. It is the case that under Philip Robinson a great deal has been achieved in prioritising FSA activity and in creating awareness. What the FSA has not achieved is any real credibility in its expertise for addressing issues directly and indirectly associated with wider issues of financial crime. In several areas, it has not been able to project that it has the expertise in house or even access to it elsewhere. Its resort to outside expertise has often appeared to many commentators random. The suspicion remains that this is not, particularly in this context, due to any deficiency in leadership but rather ambiguous support within the FSA and lack of resources. It is well-known that successive chairmen have taken little or no interest in this aspect of the FSA's responsibilities and in at least one case attempted to have the statutory mandate removed.

Of course, this is how we do things in England. Sadly, much the same could be said albeit in a different context of SOCA or for that matter the specialised agencies that have been established to address fraud or pontificate on it. This, I hasten to add, is in no way a criticism of any individual within these bodies – but of the perceptions or lack of perception, of those who appoint and then move on. In policing and even the security and intelligence services, there has been a long history of inability to identify, recruit and retain specialised knowledge in certain key functions. Indeed, while it would not be appropriate to go into detail even within the defence and security establishment there is a current issue in regard to analytical expertise in regard to an issue of such national importance as terrorist finance. Within SOCA sadly, the natural and predictable tensions between persons with different agency backgrounds and skill sets has not been resolved and in certain functions, this continues to undermine – if not actually efficiency, credibility and certainly staff morale. Even in areas of high-national priority where there is clear political commitment we do not appear to be able task, focus and deliver. Indeed, recent revelations about COBRA from the perspective of the former head of anti-terrorism in the Met illustrate this!

Having said all this – do we actually have the expertise and competence that could be better tapped and employed? Those who observe us from overseas are now seriously wondering whether we have – particularly in regard to the financial sector. I have long bemoaned, in these pages, the fact that the British academic establishment has shown about the same level of interest as have most FSA chairmen. In fact, there are probably fewer senior academics interested in any aspect of financial crime control today than there has ever been. This lack of leadership and career prospects has had an inevitable impact on those interested in research. The promise that certain business schools might seize the issues has also in the main dissipated. Of course, especially in regard to many aspects of financial crime control practical experience is as important – in context, than intellectualism. However, it would seem that even here things are at a premium. Perhaps, the situation will change – but one has to say that with the reductions that are taking place within the Revenue Service, the prosecution service and possibly in this area even the FSA – the auguries are not good.

Barry Rider