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Sunday 7 September 2008

The great box-ticker takes charge

Richard Northedge on the FSA's new chairman

The Financial Services Authority has had only two chairmen since its creation in 1997, and as the Northern Rock debacle happened on the watch of the second incumbent, Sir Callum McCarthy, the model for his replacement is inevitably the original holder, Sir Howard Davies. On that basis, Adair Turner — Lord Turner of Ecchinswell — ticks all the boxes. Both are former McKinsey men; Turner followed Davies as director-general of the CBI; Turner is a visiting professor at the London School of Economics, where Davies is now director. Both sit on the board of Paternoster, a private company that buys out corporate pension funds. Their kids even attended the same primary school. They are from the same mould.

But while Turner ticks all the boxes, colleagues warn he is a box-ticker. This holder of a double-first from Cambridge is undoubtedly bright, but not necessarily practical or pragmatic. Until he has his rows and columns filled in he is reluctant to make a decision. As a non-executive director he has frustrated chief executives by sitting on the fence until his matrix is complete.

Critics blame his 13 years at McKinsey: good at analysing problems, good at expecting someone else to solve them. And they cite his lack of hands-on experience. He quickly left his first job, in BP’s strategic planning unit, because it wasn’t sufficiently challenging, spent three years with Chase Manhattan Bank, then began his long career in consultancy and quangos. Despite his non-executive directorships, a plc chairmanship has eluded him: one headhunter has said that his box-ticking mentality makes him great for chairing the audit committee, but not for heading the company.

The firms Turner will be monitoring at the FSA hate box-ticking — demands to comply with every rule, regardless of common sense. Yet when he left the CBI he wrote Just Capital, a book defending red tape and arguing for more state intervention in business. It was the final straw for CBI colleagues who had already labelled him ‘Red Adair’ because of his flirtation with New Labour and support of higher wages.

Turner chaired the Conservative Association at Cambridge, but later left the party to support the fledgling SDP. He now sits on the crossbenches in the Lords, despite a closeness to Labour that keeps him on the rota for getting the government out of holes. Since producing a report on the NHS for Tony Blair’s Forward Strategy Unit, Turner has chaired the Low Pay Unit, been Pensions Commissioner — thinking the unthinkable yet eventually persuading Gordon Brown to accept his proposals — and will step down as ‘climate change czar’ only because of his new FSA role.

But being the FSA’s new Howard Davies is not enough. Davies had no predecessors. He could blame all problems on the previous regulatory regime — which was why that regime was replaced. McCarthy’s misfortune was to pick up Davies’s mistakes as well as to make his own. Turner has no honeymoon: he inherits all the outstanding unfinished business before he faces his own tests.

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