The UK’s new financial regulators will need clear lines of responsibility and the right statutory objectives if they are to meet their intended aims, the BBA has told the joint committee of MPs and Lords scrutinising the new Financial Services Bill.
More important than the new regulatory structure will be clarity in the chain of command so that it is clear who is in charge when problems arise, the BBA told the Lilley Committee on the Financial Services Bill in a written response published today.
The “twin peaks” regulatory structure will see the creation of two new regulators – the Prudential Regulatory Authority and the Financial Conduct Authority. The BBA believes this may well strengthen safeguards in the financial system by engaging more closely with regulated firms and also monitoring risks to the financial system, but this success depends on the new regulators having the right statutory objectives, good quality staff and a coherent focus. Among those objectives should be maintaining the UK’s competitiveness as a global financial centre.
BBA chief executive Angela Knight said: “The banking crisis happened in many countries and with differing regulatory structures. What has become clear that is that the right approach to supervision, risk management and business mix is the top requirement. Structure is down the list.
“We support many of the changes such as creating a separate body – the Financial Policy Committee – to safeguard financial stability. This committee along with the two new regulators need to take into account factors such as economic recovery and international competitiveness. A balance is essential to bring about the right combination of stability, credit available and at the right price, and all the jobs that result from having an international centre here in the UK.”
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