3rd December 2015

Quicksand in the sandbox

At a recent Wealth Management conference, FCA chairman John Griffith Jones, observed that the acting FCA ceo, Tracey McDermott , is concerned that regulated businesses “are spending too much time on dealing with regulation rather than taking care of the business.”

Do not seek out solace in a darkened room just yet as it gets better. 

He said: “I accept we have a huge burden of regulation. I think in the long-term wealth management businesses will flourish if they provide valued and trusted service, so there will be less regulation.” 

Regulators saying less regulation will be an outcome of valued and trusted service??? 

He may have a point in saying that firms should not be expected to spend so much of their time dealing with regulation but in outlining some of the latest ‘sandbox’ proposals coming from Project Innovate and the FAMR he may wish to ponder on the general state of UK regulation and what a mess it has caused in so many aspects of commercial and public sector life in UKplc.

Regulation, we are told, is a vital part of society, it is local, national, European and some cases global yet despite it ever invasive, viral presence in UK society it seems that the more we regulate the worse it gets. 

And the regulator in just about every case will claim it is not their fault. 

Regulators raison d’être is to ensure that consumers are protected at all times, sometimes in every possible way verging on protection from themselves.

But regulation is self-perpetuating, a real life version of perpetual motion that pays a lot of money to those for whom that career path is chosen. For example the average pay per manager grade at the FCA is £84,672. 

We all know about the failures of regulation in financial services, but would UK plc and its population (now commonly referred to as ‘vulnerable consumers’, ‘stressed commuters’, ‘long suffering motorists' or ‘hard working families’) be better off as a result of much reduced regulatory action such as Mr. Griffith Jones would imply? Or see it replaced with that all important mix (of fast diminishing human attributes that regulation has rendered idle) common sense, caveat emptor and intuitition?

Here is just a sample selection of regulators, where I think many reading this would see confusion, failure, cover ups, unintended consequences and huge spends seeing zero benefit for everyone except those that work in regulation. 

There are many, many more. 

Electricity regulation: OFGEM is the regulator; their strap line is “making a positive difference for energy consumers”. Deregulation and creating free markets (that in fact now need all this regulation) or the failure of regulators to keep up with fast-moving markets, can become unbelievably costly, as we can all now see. The worldwide electricity sector reforms of the early 1990s have revealed the complexities of introducing market driven reforms and making them work in network and infrastructure industries.

Were we better off pre- denationalization and pre regulation with just one supplier?

Gas regulation: OFGEM again. Ofgem found British Gas incorrectly blocked businesses from switching and failed to give some businesses notice that their contract was due to end. The fine was £5.6m, but really just another large fine that means nothing.

Most complaints about energy companies are about inaccurate, late or unclear energy bills. The Code of Practice for Accurate Bills from the Energy Retail Association sets out requirements for how energy bills should be calculated and issued.

Were we better off pre- denationalization and pre regulation with just one supplier?

Food regulation: That other FSA, the Food Standards Agency. Paris says Brussels and London are dragging their heels over proposals to improve food safety by introducing the labeling of meat in ready-made meals. And only last week we hear that the lamb in our kebabs is chicken or beef. The cost of food labeling compliance in the UK is estimated at £32.5m for just one major retailer.

Were we better off pre regulation? Were we better off when we did not have supermarkets and fast food outlets, seeing what we brought at butchers, bakers, greengrocers?  

Telephone regulation: OFCOM is the communications regulator. We regulate the TV and radio sectors, fixed line telecoms, mobiles, postal services, plus the airwaves over which wireless devices operate.

The regulatory ‘Waterbed’ effect is already well illustrated in the mobile phone industry where regulation fixes the prices of basic products and services only for consumers to see significant increases in the price of peripherals and additional services as a direct consequence.

Were we better off pre- denationalization and pre regulation with just one supplier, the GPO?

Railways: ORR The Office of Rail Regulation are the economic regulator for railway infrastructure (Network Rail and HS1); the health and safety regulator for the rail industry as a whole – including mainline, metro, tramways and heritage railways across Britain; and the industry's consumer and competition authority.

Were we better off pre- denationalization, privatisation and pre regulation with just one supplier- British Rail?

National Health regulation: Now here it get’s really complicated and it is little wonder that healthcare is in such a mess.

In hospitals we used to have a simple management structure, it was called ‘Matron”. 

Look at these regulatory bodies, is it any wonder that we see so many problems, with the very simple mission objective being to make people better being thwarted at every regulatory door, often ending it would seem, in DBNHS (Death By National Health Service).

The MHRA is the government agency responsible for ensuring that medicines and medical devices work, and are acceptably safe. The MHRA is a centre of the Medicines and Healthcare Products Regulatory Agency, which also includes the National Institute for Biological Standards and Control (NIBSC), and the Clinical Practice Research Data link (CPRD). The MHRA is an executive agency of the Department of Health. 

CQC’s The Care Quality Commission (CQC) makes sure hospitals, care homes, dental and GP surgeries, and all other care services in England provide people with safe, effective, compassionate and high quality care, and encourages these services to make improvements.  

NICE National Institute for Health and Care Excellence provides national guidance and advice to improve health and social care. It develops guidance, standards and information on high quality health and social care. It also advises on ways to promote healthy living and prevent ill health.

HFEA Human Fertilisation and Embryology Authority is the UK's independent regulator dedicated to licensing and monitoring fertility clinics and research involving human embryos.  

NIHR The National Institute for Health Research is a large, multi-faceted and nationally distributed organisation. Together, NIHR people, facilities and systems represent the most integrated clinical research system in the world, driving research from bench to bedside for the benefit of patients. 

PHE Public Health England was established on April 1 2013, just like the FCA, to bring together public health specialists from more than 70 organisations, including the former Health Protection Agency (HPA), into a single public health service.

PSA Professional Standards Authority for Health and Social Care promotes the health, safety and wellbeing of patients, service users and the public, by raising standards of regulation and voluntary registration of people working in health and care. It is an independent body, accountable to the UK parliament.

Is it any wonder that doing businesses, society and life in general is made more expensive, difficult, confusing and less fit for purpose?

Here, with some help from Wikipedia, is a list of some I may have missed:

Charities

Education

  • Ofqual - Office of Qualifications and Examinations Regulation
  • Ofsted - Office for Standards in Education, Children's Services and Skills

Environment

Finance

Health

Law

Social Care

Transport

Utilities

PhonepayPlus - regulator for phone-paid services in the UK, part of Ofcom, replaces ICSTIS

Other

Those hardworking families are doing so just to keep all this lot going.

A glimmer of hope for the UK’s attempt at EU renegotiation is that Ministers from 19 member states – including France, Germany, Italy and Spain – have signed a letter to EU Vice-President Frans Timmermans, calling on the Commission to do more to reduce the burden of EU regulation on businesses.

The Top 100 most burdensome EU regulations, according to Open Europe cost the UK economy £33.3bn a year.

 

The unintended cost burdens of regulation in the UK are almost unquantifiable, certainly vast and in almost every case there are grounds to think that life could be simpler, cheaper and more fulfilling if we all took responsibility for our actions, adopted common sense in management styles, business practices, directives and substituting ‘elf and safety’ with sanity. 

And less time playing in the sandpit?

 

Panacea Comment, Regulation

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