CITY AND SUBURBAN
Bertie could tell you — Aunt Agatha doesn't want a nanny
CHRISTOPHER FILDES
Bertie Wooster's Aunt Agatha could look after herself. She wore barbed wire next to the skin, and her late husband, J. Spenser Gregson, had cleaned up to an amazing extent in Sumatran rubber shares. Now she has given her name to the small investor, with the implication that small Investors of her class need to be nannied. I am not sure that Aunt Agatha needs a nanny. What she needs, and what the City is coming to see that she needs, is an insurance company and a policeman. The nanny regime was typified by the first shots at investor protection made by the Secur- ities and Investments Board. There had to be rules for everything, and except in those few marketplaces where Aunt Agatha would never tread, the rules must be the same for everyone — and aunt-proof. The consequence was a rule-book which the stoutest aunt would never read or, if she did, would not understand. The danger was to leave her under the illusion that any business licensed under the SIB rules must be a safe home for her money — thus implying that the weaker businesses could enjoy a free ride at the market leaders' expense. For aunt and regulator alike, that, as we can now see, was asking for trouble. It is what happened with the American 'thrifts' (roughly, building societies) and the bill for bailing them out has reached $500 million. The SIB has now tried again, starting from first principle, writing in English — and recognising that private investors and professional players need different treatment. What should the regulators tell the aunt? First, that licens- ing cannot guarantee safety. In markets, risk and reward are meant to go together, and in life, safety is relative. The aunt's reassurance should come not from the licence but from the insurance certificate which must now come with it, and protects her, within reasonable limits, against fraud. Against the other risks which range from incompetence to malpractice she has to rely on the regulatory policeman, He has wider powers, including, in suitable cases, the power to get her money back.
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