“The regulator that cannot hire cannot regulate” — a conversation on institutional capacity
A conversation with a former supervisory official on what actually limits enforcement: not the absence of powers, but the absence of anyone able to exercise them.
This conversation has been edited for length. Our interviewee spent eleven years in a national supervisory authority and asked not to be named while their former colleagues remain in post.
You have said the powers are mostly adequate. That is not the usual complaint.
The powers are broadly fine. We could compel information, inspect, fine. What we could not do was understand what we were looking at fast enough to act while it still mattered. We had two people who could read a model with any confidence, for a sector with several hundred deployments. So we did what any under-resourced body does: we asked for documentation and assessed the documentation.
Which tells you what?
It tells you whether they employ good technical writers. That is genuinely all. A well-documented bad system reads better than a badly documented good one, every time, and we had no realistic way of distinguishing them at the volume we were handling.
Why not hire?
Public pay scales. We were offering perhaps a third of what the firms we supervised were offering the same person. And the people who did join were the most employable people in the building — after two years they had supervisory experience, which made them considerably more valuable to the industry than to us.
We were an expensive training programme for the sector we were meant to be supervising.
What would you change first?
Two things, and neither is glamorous. Pay technical staff at market rate and be publicly unembarrassed about it — the cost is trivial against the cost of a supervisory failure. And build shared technical capacity across regulators, because no single authority can justify the headcount but five together easily can. Everyone agrees with the second in principle and nobody wants to fund a body they do not control.
Does new legislation help?
It gives us more to be unable to enforce. I do not mean that cynically. Obligations are necessary. But a new obligation administered by the same two people produces a more detailed record of what we did not manage to look at.
