Philip Hoult says the FSA's creation of an independent tribunal and practitioners' forum shows it is capable of taking criticism on board.
The City may finally be getting the regulatory regime it deserves for financial services.
The Treasury's approach to the launch of the new super-watchdog, the Financial Services Authority (FSA), can most charitably be described as stumbling.
At various stages, market practitioners and their advisers have been asked to comment on draft documentation, such as the FSA's handbook of guidance and rules, when other relevant information was not yet available, so rendering the consultation exercise worthless.
And when the draft Financial Services and Markets Bill was published in August, commentators lined up to attack the wide powers of enforcement given to the FSA.
These powers, they said, would give the FSA the role of investigator, prosecutor, judge, jury and executioner and, as a result, breach principles of natural justice and the European Convention on Human Rights. Commentators also showered criticism on the crucial definition of “market abuse”, which they said was too widely drawn.
But the Treasury and the FSA appear to have taken some criticism on board.
Two weeks ago, the FSA announced that it would create an “internal tribunal”, staffed by independent outsiders, which will assess whether a breach of rules has taken place and decide on appropriate penalties.
This will go some way towards addressing the “judge, jury and executioner” criticisms – voiced loudest by partners at Clifford Chance – by separating the powers of investigation and judgment.
Last week, the FSA revealed that it was setting up a practitioners' forum, headed by Schroders chairman David Challen, with members drawn from the City's great and good.
The forum will assess the FSA's overall effectiveness and review new FSA rules.
Although the legal status and powers of the internal tribunal and the practitioners forum are unclear, their creation is a step in the right direction.
Also there were reports last week that the Treasury was prepared to rethink the drafting of the legislation, on issues such as market abuse.
Little by little, and without much fanfare, the Treasury and the FSA are trying to meet the City's concerns.
With the Bill expected to be included in the Queen's speech this week, just how far they will go should become clear.