Education, not regulation

Regulation is bound to fail on almost any number of fronts but let me highlight a few obvious ones.

First, capitalism. Financial institutions will always be able to afford to employ people smarter than regulators, thus the authorities will forever be doomed to be behind the curve of the next dangerous financial wheeze.

Second, practitioners will concentrate on following the letter of regulation, not the spirit. This is a great game for many and keeps endless lawyers and other expensively educated people in fine fettle.

Third, cross-continent regulatory co-operation sounds nice but is totally impossible to achieve. Why, the UK and US intelligence cannot even co-ordinate on the surveillance of al- Qaeda recruits! What chance do the suits at the FSA, SEC etc have?

If we are to have any hope of achieving lasting financial probity, we need to grab the populace when it is young. If we continue to rely on simply learning rules and regulations then, when Janet and John enter the workplace, we will be continuously shutting doors after horses have bolted.

Instead we must instil in our children the virtues of financial responsibility and integrity at an early age because then we give them the best possible chance of becoming useful citizens in their careers.

In among the usual toe-curlingly awful television ads from the high-street banks (to my mind, the Halifax regularly carries off the prize for the most cringeworthy), I saw one recently from Nat West, featuring some of its bright-eyed and bushy-tailed staff going into schools and teaching children the basic financial facts of life.

The irony that its parent, RBS, had to be given the biggest financial bailout in UK government history seems to have been lost on those responsible for the ad – but c’est la vie!

Perhaps the necessity of educating our children about sound financial housekeeping is finally beginning to get through. I do hope so. Maybe then there will be fewer in the workforce that regard it as a God-given right that they should have a large mortgage, be able to educate their kids privately, take expensive holidays every year and so on. Then SMEs will be able to afford to employ talented staff, who don’t need absurdly large uneconomic salaries to finance their over-inflated and irresponsible lifestyle.

For more than 30 years, the City Grump has had experience of senior positions in most aspects of city life. These include stockbroking, stock exchanges, fund management and corporate finance.

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