Continuing my recent discussions about the role of regulators in the debt enforcement industry, in this piece I want to talk a bit about the problem with opaque regulators.
I’ve been particularly shocked by the current controversy surrounding how RBS treated struggling small businesses during the financial crisis. I say this not just because of the problems these organisations faced, which were frightening, but because of how the FCA has gone about discussing the issue. In the furore around the publication (or not) of the FCA’s report, I think there are important points to be made for for policy makers planning a regulator in the debt collection industry.
News of the alleged abuses by RBS subsidiary Global Restructuring Group (GRG) only broke after the FCA-commissioned research was leaked to the BBC. It’s my view that the controversy was amplified by the fact that this information would have remained behind closed doors if a news agency hadn’t managed to get hold of it. While I accept that businesses should not have their name dragged through the mud before any wrongdoing is proven, there’s a bigger issue at stake here: transparency.
If these concerns and the details of subsequent investigations aren’t shared with sector peers and stakeholders from broader sections of the economy, it becomes difficult to address the problems they raise. Any organisations indulging in similar practices don’t see that they’re being regulated, reformers aren’t given the chance to comment and instigate change and clients aren’t able to improve their tendering and monitoring processes.
Balanced or toothless?
Since the leaking of the study, MPs have been calling for its publication in full. So far, the FCA has only published an interim summary, arguing against the release of the complete report on two grounds. Firstly, papers are completed on the basis of privacy, which the FCA claims ensures co-operation. Secondly, there are legal complications due to privacy laws.
Both of these are valid concerns, but, I believe, not sufficient to justify the damage such a behind-closed-doors can do to trust and to industry development. After all, could positive developments like the new proposals for mediation services occur without this kind of openness and scrutiny? I have my doubts.
I am immensely pleased with the work CIVEA does in the enforcement sector, but, as a stakeholder, I also accept that they are currently working with my interests in mind. Should they switch to the role of regulator, or a new regulator be introduced, it would be necessary to emphasise that their responsibility is also to wider society and the industry as a whole. And to me, that means transparency, clarity and rigour. And it cuts both ways.
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