The chairman of the Financial Services Authority, Lord Turner, appeared before the House of Commons Treasury Select Committee today. He promised fundamental changes in the way in which the FSA operates (to be published next month) and strongly criticised the regulatory philosophy which had guided the FSA's operation. In fact he promised more: a revolution in approach by the FSA. Lord Turner stated that the FSA had operated under a "particular philosophy of the way you do regulation which I think in retrospect was wrong". He also stated that it was not seen as part of the FSA's role to ask questions about banks' strategy. This approach, he stated, existed within "a political philosophy where all the pressure on the FSA was not to say 'are you looking more closely at these business models?' but to say 'why are you being so heavy and intrusive, can't you make your regulation a bit more light touch?".
The FSA's chief executive, Hector Sants, also appeared before the Committee. He explained some of the changes that the FSA has recently made with regard to its assessment of the suitability of bank directors. The Committee's proceedings can be watched here; they have been reported widely: see, for example, The Guardian, The Financial Times and BBC News.
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