In his previous incarnation as Chief Secretary to the Treasury, Stephen Byers, now the Secretary of State for Trade and Industry, gave a vote of no confidence to self-regulation.
He helped to develop the Financial Services Agency, replacing a number of overlapping regulators with a single statutory-based independent regulator.
Byers said in November 1998: ‘A single regulator with a single authorisation process, a single compensation scheme, a single ombudsman, and a single appeals tribunal, (will) reduce the amount of regulation whilst at the same time providing for greater accountability.’
How right he was. Such principles are the only way of reducing waste, duplication and creating independent and durable regulatory structures that command public confidence.
Yet what does he find in his new department when regulation of auditing and insolvency is undertaken? That the DTI has shunned all his declared principles. Under the Mandelson plan, five bodies will regulate 9,500 auditing firms and eight will deal with 1,800 insolvency practitioners. None will have any independence from the auditing and insolvency industry. No regulator will owe a ‘duty of care’ to anyone. There will be no statutory ombudsman and no compensation scheme for those failed or fleeced by auditors and insolvency practitioners.
Accountancy bodies and their hand-picked cronies filter the evidence and act as judges and juries to protect their own. Innocent victims have no champion to defend and protect them. This situation cries out for a regulatory regime which protects the consumer.
Yet the Mandelson solution was to recommend the old mess with knobs on.
Stephen Byers has the opportunity to put backbone in the Mandelson proposals and apply his principles to auditing and insolvency. Instead of feather-duster self-regulation, he should introduce a single statutorily-based independent regulator and leave the accountancy trade associations to do what they are best at: arguing among themselves and representing the sectional interests of their members.
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