BBA calls on FSA for better supervision
Commenting on the FSA’s business plan for 2010, the BBA said: “Banks support the need for reform and will continue to work with the regulator to improve regulation and strengthen the financial system in the UK.
“We understand that effective regulation is vital in helping restore confidence in the banking system but supervision needs to be of high quality and holistic, looking at any organisation as a whole and not just a collection of parts.
“We encourage the FSA to consider the wider impact of reform and consider the aggregate impact of change from the Turner review and that coming from both the Financial Stability Board and the EU. To move unilaterally in the UK risks cutting across – and radically altering – the international consensus on how banks should be controlled. The UK has already made more rule changes than any other country, particularly in relation to capital and cash. It is also vital that policy makers pay very close attention to the adverse impact that increasing the costs on the banking system will have on the real economy. Put crudely, banks cannot hold more capital and lend more yet as the economy recovers so the demand for finance by business will increase.
“The FSA should also look at how rules affect retail customers . The Financial Services and Markets Act – which governs how the FSA operates – fails retail customers as it ends up with a stand off between the Financial Services Authority, the Financial Ombudsman Service and the Office of Fair Trading about what should – and should not – be the standards. The FSA’s a principles – as opposed to rules – based regime means we end up, years down the line, with arguments about what was meant at the start.
“We urge regulators to engage earlier with the industry on products and services and to work to create a framework that gives consumers more certainty and confidence.”