UK & US: Financial Services Regulatory Reform

Reform of the regulatory framework for financial services is being considered in the UK and USA. In the UK, the Financial Services Authority has published the results of its internal review concerning the manner in which it regulated Northern Rock. This makes many recommendations for improving the way in which the FSA supervises firms. These recommendations are in addition to those being considered as part of the review of the way in which the tripartite authorities - the Bank of England, the FSA and Bank of England - cooperate to ensure financial stability.

In the US, SEC Chairman Cox has stated (in press release 2008-53, March 29):

"Recent events have provided further evidence, if more were needed, that financial services regulation in the United States needs to be better integrated among fewer agencies, with clearer lines of responsibility. Just as systemic risk cannot be neatly parceled along outdated regulatory lines, the overarching objective of investor protection can't be fully achieved if it fails to encompass derivatives, insurance, and new instruments that straddle today's regulatory divides. The proposed consolidation of responsibility for investor protection and the regulation of financial products deserves serious consideration as a way to better address the realities of today's markets".

Postscript (25 April 2008): The US Treasury's "Blueprint for a modernised financial regulatory structure" is available here.

Postscript (28 April 2008): The FSA has now published its internal report titled "The supervision of Northern Rock: A lessons learned review".