This watchdog must bite

JOHN Tiner was away sunning himself as it was revealed that the former Andersen partner would be taking over as chief executive of the Financial Services Authority in September.

His appointment is not unexpected. But is certain to be disappointing to victims of the split capital trust scandal and Equitable Life policyholders who would have liked a clean sweep at the top.

After his 25 years at Andersen, with its grim history stretching from DeLorean to Enron, one wag compared Tiner's appointment to American patriarch Joe Kennedy, who moved directly from shorting the stock market during the Great Crash to becoming the first head of the Securities & Exchange Commission.

The FSA likes to congratulate itself on avoiding an insurance crisis of enormous proportions as the Footsie lurched towards the 3000 level and many insurers looked as if they might become technically insolvent. But it is by no means clear that Tiner took the lead in saving an industry that had to lobby heavily to get investment rules relaxed.

The new team of chairman Callum McCarthy and Tiner will not be short of work. Sir Howard Davies leaves with many tasks undone.

This is not necessarily his fault. The Treasury conducted something of a guerrilla war against its own creation with a series of studies on insurance and pensions that no more than shadowed work already done by the FSA.

It also loaded huge amounts of new work on to the FSA's plate through the licensing system for mortgage and insurance brokers.

That said, the FSA has hardly become a regulator that strikes fear in the hearts of wrongdoers. Aberdeen, the most infamous of the split capital trust creators, has been playing a legalistic cat and mouse game with regulators in a matter that should have been cleared up months ago.

Market abuse offenders such as the senior directors of Marconi received a slap across the wrist, which allowed them to claim that it was as if the inquiry had never taken place.

The first task for McCarthy and Tiner is to put more lead in the pencil of regulation. It is time to make catching wrongdoers and delivering speedy remedies the priority.

Too much time has been spent trying to create a neat bureaucracy for the benefit of those who work at the FSA rather than the consumers of financial services.

Carrier games
THE dispute over the putative costs of building two new aircraft carriers for the Royal Navy was absolutely predictable. This was a contract cobbled together by Defence Secretary Geoff Hoon on the back of an envelope.

It is not surprising that BAE Systems and Thales - who were pressured into an alliance they never wanted - are now telling government the original estimate of a £2.9bn cost is inadequate and they need £4bn.

BAE Systems has been here before. It was rightly castigated over cost overruns on the Nimrod surveillance aircraft and Astute submarine contracts.

But there was another side to this dispute. Throughout the design and build of both contracts, the Armed Forces frequently changed and upgraded the specifications - making it much more difficult to bring the project in on budget.

Disclosure of the provisions against cost overruns and the dispute with the government did enormous damage to BAE's management and was one of the factors in John Weston's departure as chief executive.

Anyone who knows BAE is aware of its weaknesses. It is a design and technology powerhouse that increased its leadership over competitors when it acquired Marconi's defence systems.

But it always has been suspect on its management controls and ability to curb costs. In the case of Nimrod and Astute, the blame game ended in a no-score draw.

We can't blame chairman Sir Richard Evans, wily old fox that he is, for pre-empting future criticism and cost overruns. But he is no doubt rubbing his hands at the prospect of an even bigger and more important contract than was originally envisaged.

Sales heat
JUNE, as previewed on these pages, turned out to be a much better month on the High Street than most predicted. Sales soared by 5.7% as the temperature headed into the 80s and people rushed to buy summer outfits, sandals and ice cream.

Despite the hot weather, no one is suggesting that last week's interest rate cut was unnecessary. Indeed, the latest wholesale price data show an annual increase of just 1.1%, despite higher energy costs.

With prices subdued and manufacturing struggling, the odds on a further interest cut by autumn remain keen.