Cooperation is key for successful financial regulation
This is according to Angela Knight, speaking at a conference of British Bankers’ Association members. The BBA chief executive told her members that Government plans to create new regulatory institutions could bring significant benefits to the financial markets as long as they have genuine democratic accountability and agree to work together to change the financial system for the better.
She told the conference at the BBA in London: “The new regulators will have to ensure that when they use their significant new powers to maintain financial stability that they consider government economic policy as well.
“For example, there is currently a potential conflict between the Government’s housing policy and aspects of the Financial Services Authority’s mortgage market review. If a bubble – say a housing bubble – begins to inflate, regulators need to consider the social consequences of the actions they take. Whatever regulatory tools they use, the consequence is the same: people do not get their houses in the way they expected, nor at the prices they hoped for. In a modern democracy this will be controversial. There will need to be wider discussions with society.
“The Financial Conduct Authority must also set in place a framework for a closer working relationship with the Financial Ombudsman Service, clarifying, interpreting and agreeing the standards required to meet important principles such as fairness to customers. The Ombudsman is a dispute resolution authority; the FCA will be the regulator.
“And the FCA will also be judged against its effectiveness in protecting the interests of all consumers – not just offering knee-jerk responses to the issues currently attracting media attention. The FCA will need to earn the confidence of consumers, but to do this effectively it will need a more measured and considered approach.”