Abandon Hope All Ye Who Enter The Financial Services Bill

The new financial regime is unsinkable

As a desperate alternative to the Eurovision Song Contest, last night I combed the latest version of the Financial Services Bill for a glimmer of evidence that the Government understands the extreme difficulty of innovating responsibly in a retail financial world dominated by a byzantine regulatory regime. 

Alas there's nothing much in the Bill except two new supervisory deckchairs from which the authorities can watch our major financial institutions power us inexorably into the icy depths. 

To be fair, the word "innovation" does appear once in this homage to complexity. But it is used in a way that could only be intended to evoke the maximum possible relief amongst those terrified of it. The financial authorities need only promote effective competition and innovation within the markets for regulated financial services. God forbid there should be a process for developing proportionate regulation of emerging business models, or that the authorities should provide guidance to those intent on delivering better outcomes for consumers than established firms or existing services. Here is the leading, bleeding, cutting edge of our giant financial regulatory regime:

"1E The competition objective

(1) The competition objective is: promoting effective competition in the interests of consumers in the markets for—
(a) regulated financial services, or
(b) services provided by a recognised investment exchange in carrying on regulated activities in respect of which it is by virtue of section 285(2) exempt from the general prohibition.

(2) The matters to which the FCA may have regard in considering the effectiveness of competition in the market for any services mentioned in subsection (1) include—
(a) the needs of different consumers who use or may use those services, including their need for information that enables them to make informed choices,
(b) the ease with which consumers who obtain those services can change the person from whom they obtain them,
(c) the ease with which new entrants can enter the market, and
(d) how far competition is encouraging innovation."