Site menu:

Site search

Get Updates

Enter your email address to hear about new posts. (You can view my privacy policy here.)


 

RSS Recent Posts

Archives (month)

Topics

Probably the best regulator in the world?

I see the Treasury has been consulting on its new approach to financial regulation. Some of the main ideas – reforming the tri-partite model – have been discussed at length elsewhere. What caught my eye were the issues which address our new government’s approach to regulatory culture.

The first issue to leap off the page was the question whether the principles of good regulatory practice should be enshrined in the legislation which will bring about the new regime. Sounds like a no-brainer. Of course, you would want a regulator to aim, for example, to use its resources in the most efficient and economic way. But hold on a minute. Let’s be blunt about this. If the people chosen to regulate the financial services industry can’t work that out for themselves, they are not the right people for this difficult job.

Making a legislative obligation out of the need to use public money wisely is unlikely to remedy a defective mindset if it turns out that the people who are appointed don’t naturally think in these terms. The general direction of travel of this government is said to be towards making individuals in society take more responsibility for their actions and not rely on others to make rules for them. That being so, it might be appropriate to start by setting an example with the legislation which governs the individuals who sit on regulatory bodies.

The paper also says that the government is looking for a more risk-based approach. But little is said (yet) in recognition of the big cultural shift that will be needed to achieve that outcome. One of the most popular phrases after any adverse incident in recent years has been: “We must ensure this never happens again”. But a truly risk-based approach suggests that we should do no more than ensure that this probably never happens again. Which means that, if it does, the regulator didn’t necessarily fail. Are we ready for that? Probably not.

See also:  You mean we're NOT supposed to avoid tax?

Perhaps  something needs to be done to ensure that we never think like that again.

Sign up for updates by Email, Twitter or RSS Feed.

Related articles on this website
It seems that, when it comes to Brexit, we can’t trust anyone to get their facts right. Not even lawyers. At least, not Lawyers for a People’s Vote (LfaPV). I don’t ...
Read the complete article
Regular readers of this blog must be sick to death by now of me repeating how much damage accounting standards are doing to pension schemes (here, here, here and, even ...
Read the complete article
I think the three words at the end of the following sentence must be the most chilling – and the most heart-warming – I have ever read from an accounting ...
Read the complete article
In 2012, when I clicked on a link in order to watch a family friend appear in front of the Leveson Inquiry, I little realised just how much the subject ...
Read the complete article
The separation of retail and investment banks is back in the news following the Chancellor’s recent Mansion House speech. Ever since the Government bail-out of Royal Bank of Scotland and ...
Read the complete article
A friend writes to tell me that she has been appointed to the Future of Banking Commission set up by Which?. Which reminds me that I have yet to return ...
Read the complete article
Until a few days ago, I had never heard the expression: "When you hear hoofbeats, think of horses not zebras". A visiting US professor used it in conversation with me. ...
Read the complete article
When the Thatcher government privatised British Telecom in the 1980s, they created a regulator to cap prices. They did the same with the privatisation of water, electricity and gas. No ...
Read the complete article
Lawyers for Alternative Facts?
Accountants in a tangle with Webb
Accountants becoming effective?
A pressing need for regulation …
Bankers cooking with Gas?
Banking on it
A horse. A zebra. Or maybe it’s a fish?
Marx out of ten for the attack on price caps?