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According to the Financial Times the Financial Services Authority is compiling a new panel of experts to undertake investigations of banks. The invitation to professional service firms is sparking a war between accountants and lawyers.
Both want these jobs. Section 166 reports allow the FSA to appoint "skilled persons" to inquire, produce findings, and make recommendations. As the FT says:
The reports are used in the wake of rogue-trading scandals, client-money problems or data breaches, and are both diagnostic and forensic.The numbers of reports rose from 18 in 2007 to 140 in 2011. The costs of the report are borne by the firm investigated. Fees for s.166 work range from £4,000 to £4.4m for large institutions.
Up to now accountants have scooped the pot. Over half of the reports were done by the Big Four accounting firms because of a cosy relationship between them and the FSA which was darkly shrouded. Lawyers were frustrated at being excluded. The big law firms managed to get at best 1 per cent of the investigations. Now the process is to be transparent.
I suppose someone has to do these investigations but both accountants and law firms--especially the big ones--depend on banks for much of their work, that one has to wonder how objective they would be. Just think how law firms refuse to act for clients who want to take on banks.
In the case of the Canary Wharf auction several years ago every law firm in London refused to sue RBS. At that time RBS had 116 law firms on its panel--something of a farce. The claimants used direct access to the Bar.
I wonder how the FSA, or the Financial Conduct Authority to be, will ensure objectivity and impartiality in this process. If the major City financial institutions are in bed with each other, I can't see that placing a bolster between them will make much difference. It would be like expecting teen pregnancy rates to decline on the back of a "just say no" campaign.
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