Needed: better regulation

For as far back as my political memory goes ‘regulation’ has been a dirty word.  Of course, this hasn’t stopped politicians reaching for new regulations and regulators at every opportunity (would it be too cynical to say in response to every tabloid headline?)   

Unfortunately the QUALITY of regulation is not matched by the QUANTITY and as a direct result the government has problems at every turn.

First to blow was Equitable Life on which the Parliamentary Ombudsman has just reported.  As Paul Braithwaite of the Equitable Members Action Group (EMAG) put it:

The UK regulators were fully aware for a decade that Equitable Life was effectively insolvent, yet they allowed the company to suck in another £20bn in pension contributions from more than a million new investors.

Quite reasonably they want some of their money back.

This is hardly small beer, but only a curtain-raiser for the credit crunch that broke open last summer.   This is the direct result of the fact that for many years major banks were operating what amounts to a Ponzi Scheme – a fraud involving paying abnormally high ‘profits’ to investors out of the money paid in by later investors rather than from any underlying real business profit.  Needless to say the regulators are supposed to stop this sort of thing but appear to have been too busy checking the petty cash to notice what was going on leaving the banks free to devise cunning ways to wriggle free of any regulation so that much – in some cases most – of their business escaped the regulators.   Inevitably this has ended in tears; we are all poorer as a result and will be living with the consequences for years to come.

Then just yesterday the BBC carried this story reporting that the lack of certainty over the value of university degrees is “descending into farce”.   This involves far less money but is perhaps the most serious of all for it strikes directly at the life chances of a generation.  All of us, students, taxpayers and employers alike, should be able to rely on the fact that a British degree means what it says on the tin.  Anything else is tantamount to fraud.

So what conclusions do I draw?  Simply this; we need good regulation for the safe and efficient functioning of the the complex world we live in.  But not too much or quantity will drown out quality.


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