Who was behind the light touch?
Sir, – It seems to me that the debate (May 12th) about principles-based versus rules-based regulation is rather missing the point.
Our financial systems failed because of a failure to conform with reasonable expectations. Expressing those expectation as principles rather than rules wasn’t the problem – it was the fact that they were ignored. A similar collapse could have resulted from behaviour which was not technically breaching any rules but was blatantly breaching the principles upon which the rules were based.
Similarly illogical thinking led to a gradual tightening of the drink-driving laws. The law said “you may not drive while drunk”. People ignored that law so it was changed to say “you may not drive while even a little tipsy”. A more logical response would surely have been to catch and punish those who ignored the law. Fear of detection is a much stronger deterrent than a higher penalty. – Yours, etc,