Direction is key to bank regulation

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, says the British Bankers’ Association.

More important than the new structure will be knowing who is in charge when problems arise, the BBA told the Lilley Committee on the Financial Services Bill in a written response published yesterday.

The “twin peaks” structure will see the creation of the Prudential Regulatory Authority and the Financial Conduct Authority. The BBA believes this may strengthen safeguards in the financial system by engaging more closely with regulated firms and also monitoring risks to the financial system. But it says its success depends of the new regulators having a coherent focus and the right statutory objectives which should include the maintenance of 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.”