Rainmaker: Twin peaks regulation gets a poor review From a regulatory standpoint, two sets of people might sound better than one. But not everyone agrees. Simon Denham, of spreadbetting and derivatives firm London Capital Group, isn't amused. "A 'twin peak" approach where regulated companies have to jump to the tune of two units rather than one is not something that fills the industry with glee," he told me, adding that by its design the FSA is an "after the event" overseer. "They have conspicuously failed to spot most major financial frauds of recent years because they are not auditors and rely on other professional services to spot these," he said. From Denham's perspective, the new wave of "over-regulation" has little overall benefit other than "annoying large numbers of people, restricting lending, loading up costs" and driving business away from the UK. He isn't alone in feeling the twin peaks model might not be the right one. Charles Ilako, head of financial services regulatory consulting at DLA Piper, thinks that the biggest risk is not just overlap, but underlap. "In pursuing their objectives, there will potentially be overlap but in some areas the two organisations might identify areas that are out of scope for both of them," he said. It is clearly a big moment for the FSA, and one that it needs to get right if the PRA and the FCA are to have any credibility. The question of overlap is likely to hurt smaller firms more than larger counterparts, due to the fact that larger firms tend to be regulated in many different ways in different countries as it is. One source at one of the Big Four banks suggested it was adopting a "wait and see" approach. Other major banks are said to be nonplussed. What everyone I've spoken to agrees on is that the new model will only work if the FSA and its successors are properly staffed with experienced regulators who want to remain for the long term. The considerable management and senior level churn at the FSA is well-documented - but it is something which its two successor agencies should try to avoid if this new model is to have any chance of succeeding.