How Our Watchdogs Can Add Bite To Their Bark

July 31, 2008
The Times
Tom Winsor

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Industry regulators must think ahead and lead from the front if the public are to get the protection they deserve.

"The purpose of the judicial system is to protect the weak and restrain the powerful." So said Thomas Jefferson in the late 18th century; his words can readily be applied to the regulation of powerful, dominant and monopoly interests in a modern economy.

Regulators today have huge power, far greater than Ministers in the years of nationalisation, much to the infuriated envy of the civil servants who used to be responsible for these things. Utility regulators ensure the physical integrity of water, energy and transport networks.  They set prices, so customers are not ripped off and ensure that competition is fair. Financial services regulators are supposed to protect vulnerable investors, enabling them to deal with reputable companies on the basis of sound information.  It all makes sense, until it breaks down.

This month, the Parliamentary Ombudsman published her report into the misregulation of Equitable Life.  Many thousands of people who lost out had a "justifi able sense of outrage" in a "decade of regulatory failure" and "serial maladministration."  The regulators were "passive, reactive and complacent", their actions "largely ineffective and often inappropriate."

As a condemnation, it was strong stuff.  But it was far from the first.