For those days when originality just isn’t working for you.
There is something cathartic about the spring clean of one’s office; the eventual disposal of all those articles and journals that you really meant to read but somehow never got around to. However, this year I decided to actually look at this motley collection and then I went deeper, down into the shelves of forgotten filing cabinets, where for reasons of either ego or nostalgia, I had kept copies of some of the periodicals I had contributed to.
As I worked my way through the subsequent pile of reading matter, a terrible sense of déjà vu came over me. The more I read, whether from 2007 or 2017, the more I realised I was reading the same article. Different authors, different journals, different dates, different jurisdictions, but the same article, sometimes word for word.
I therefore present a set of quotes from the past. Some are mine but I probably wasn’t the first to use them, indeed they have certainly been well tested and there is clearly no copyright in force.
“Our proportionate, risk based approach is integral to the financial sector in…”
“… has a long established, excellent reputation for quality business”
“Financial firms and their clients are increasingly looking to do business in reputable jurisdictions such as…”
“We have a demonstrable track record of regulating to international standards”
“… prides itself on its constructive relationship with the finance sector”
“… firmly supports and encourages innovation within the sector”
“… is committed, as is the jurisdiction itself, to transparency”
“ as a regulator we realise it is important to be approachable by our stakeholders”
“We operate on the principle of open communication with our stakeholders”
“We are compliant with the highest standards of international regulatory requirements”
“The jurisdiction has proven itself to be robust in fighting money laundering”
“We have a proactive approach to meeting developing international standards”
“Despite our size, we have been effective in having had our voice heard in the international standard setting bodies”
“We are aware of the risk of too much, restrictive, regulation and therefore seek to deliver good regulation that further enhances the reputation of…”
“We recognise that, as in any jurisdiction, a few firms may operate in a way that disadvantages clients and damages the reputation of… In such circumstances we can and do use our enforcement powers to ensure safeguards are maintained”
“… continues to demonstrate that it is a safe location for firms and clients”
“We are aware that, in a rapidly changing financial environment, regulatory response times can be critical. We therefore spend considerable effort ensuring our speed of response meets market needs and expectations”
“We are acutely aware of the cost of regulation both to the firms and their clients. We therefore ensure that we look at the cost benefit of all proposals”
“Our principle based approach allows us to focus on uniformity outcomes whilst recognising that one size doesn’t fit all”
“Our principles based approach has allowed us to move from tick box supervision to assessing actual risk”
“We believe in better regulation, not more regulation”
“Did I mention proportionate?”
“And risk based?”
This conformity in approach should be of little surprise. Regulators, especially from small jurisdictions or less developed economies have become increasingly unable to express individuality in their approach. This is partially due to the way international supervisory standards are generally developed.
Whilst appearing to be inclusive in nature due to their large membership, international standard setting bodies such as the International Organisation of Securities Commissions (IOSCO) are, in reality, dominated by a few large jurisdictions, with the majority of their membership having little (if any) influence, and the industry they seek to set standards for even less so. This is because only the largest regulators have the capacity, in both financial and human resources, to fully participate in the numerous working groups at which the standards are actually set.
A few, such as Jersey, have been able to exercise some influence by focusing on one or two key areas most material to their specific needs. However, most standards are effectively set by the regulators from a few jurisdictions with virtually non-existent general political scrutiny or effective broad industry consultation.
This dominance may become of concern in respect of establishing standards for Distributed Ledger Technology (DLT) and crypto currency/token offerings. The risk will be that the preconceived prejudices and concerns of some powerful jurisdictions may result in standards less aimed at effective regulation and supervision (as is already being developed in jurisdictions such as Gibraltar), but rather aimed at restrictive and anti-competitive control by favouring existing large market participants and creating high entry barriers. The resulting standards will then be required to be applied globally so harming the growth of potentially beneficial, if disruptive, new technology players. It would be far better that the standard setters learnt from the work of places such as Gibraltar and its regulator, but history does not provide an optimistic prognosis that this will be the case.
In the nineteen years I was a regular attender at IOSCO meetings and conferences, some standards were set following horse trading between the major players, other delayed or changed due to the national interests of a single powerful member. Even the voting structure, which was amended to permanently deny the Crown Dependencies and Overseas Territories of their own votes despite their being full members, was achieved by a shoddy political compromise and lacked any coherent logic.
As a result, whilst the standard setters press hard for board diversity, they have themselves ended up suffering from conformity and confirmation bias, looking for the same solutions in the same places and then enforcing the resultant standards with little regard for jurisdictional differences. It is no wonder that we all began to use the same language and terms when we spoke. Regardless of how meaningless the words became, they were safe, non-controversial and conformist.
It is difficult to imagine a regulator claiming to be “disproportionate” or “random based”, although in answer to one particularly ludicrous question from a journalist asking for why a particular event occurred, my response (subsequently quoted) that “s*** happens” was probably not the highpoint of my dealings with the media.
As a result, regulatory speeches and interviews, with a few brilliant exceptions, normally at the end of a career (intended or otherwise), will continue to be warm sounding but meaningless gloop. For those of you who aren’t regulators, you can always turn this into an unusual version of Bingo and see how many of the key words are used in a speech, interview or article.
1 Point: Risk based, Proportionate, Principle, Reputation.
2 Points: Cost effective, Proactive, Reputable, Quality.
3 Points: Transparency. Approachable, Safeguards, Standards.
4 Points: Better not more, Robust, Speed of response, Stakeholders,