On the front page of the FT the other day is a big article saying how pissed off the FS sector is with the FSA for changing its mind about risk management regulations it was introducing. There was a raft of new recommendation in the Prudential Sourcebook about how the players were supposed to manage their operational risk in particular. In the event the FSA said that the matter was being overtaken by EU regulation and they were dropping the matter. The industry said that they had already spent millions on compliance and that this was now wasted.
The FSA claims that it works with the industry to produce sensible regulation that is in the industry's interest to comply with. The industry in practice will only implement things that have official force in case their base costs get out of line with the competition. That is nobody will actually implement sensible measures for their own sake as part of responsible business management. I know this first hand as well.
Needless to say the FT article does not conclude that this shows that the whole process does not work and cannot work.