Mr. Howard Davies, the previous chairman of the FSA recently admitted that “The political mood, and certainly the mood in the markets, was that regulators should observe how markets evolved and try to craft their regulatory environment to cope with the risks that emerged.
We have now seen that an approach of that sort can step too far back... We now can see that if you step too far back, trends can develop in a way which creates trouble, and that there needs to be, I think, more self-confidence in the regulatory world to be prepared to step in at an earlier stage and to challenge the judgments of the markets.” 5 11.