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Watchdogs? More like dormice! Time to make them sackable

Regulating the regulators?Two contemporary cases highlight perfectly how accountability has become a byword for impunity. It is almost incredible that Paul Flowers, the disgraced former chairman of the Co-op Bank, was appointed after one 90-minute interview, even though he was a financial illiterate (he estimated the bank’s asset base at £3bn when actually it is £47bn) and had disclosed a criminal conviction. His appointment was waved through by a member of the FSA (Financial Services Authority) who did not bother to quiz Flowers’ 1981 criminal conviction for gross indecency on the grounds that it was irrelevant to the role of bank chairman!

It is perhaps even more incredible that the man who performed such a skimpy and peremptory interview is now, not sacked for negligence and incompetence, but rewarded wit the post of senior director at the new Financial Conduct Authority! Clive Anderson, the interviewer concerned, defended his decision to appoint on the grounds that Flowers was able to control the Co-op Bank’s large and unruly board, as though basic banking experience were was not essential or at least no more than a useful add-on. As if all that were not enough, financial services firms still operate under the now utterly discredited Approved Persons Regime.

Then there is the discovery by the BMJ via FOI requests that the drinks industry had no less than 130 meetings with the Department of Health official and ministers in the period leading up to the government decision in July last year to drop plans to introduce Minimum Unit Pricing which Cameron himself had said could cut 900 alcohol-related deaths a year. The net result of all this ultra-intensive lobbying was that ministers decided instead to ban the sale of alcohol at below-cost price – the very measure that the industry itself wanted, with Lynton Crosby, Cameron’s own controversial election strategist, credited with having a major role in the decision. This makes it all too shockingly clear that big business and profits are trumping concern for the nation’s health. And in some senses this case is even more serious than the Flowers debacle because the offending agent here is not an incompetent regulator but the government itself.

So what should be done? This is another area where Parliament, whose central role is to hold the government to account, needs to assert its powers. First, the appointment of every key regulator, even if the initial nomination comes from government (i.e. from the Prime Minister’s office, as advised by the civil service), should have to be ratified by Parliament (i.e. the appropriate Select Committee) before the appointment could take effect – as happens with Congressional hearings in the US. That means that the regulator responsible could later be summoned back before Parliament and required to justify his action, as in this Flowers case, and failure to do so satisfactorily could lead to his dismissal.

Second, since government cannot be trusted to act in the public interest, there should be a regulator appointed, not by the Executive, but by Parliament to oversee the workings of departments delivering public services, to investigate complaints, to initiate inquiries, and to make an annual report to Parliament which would be the subject of both public and parliamentary debate.

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