There are continued calls from MPs in the United Kingdom to reform the way that the banking system is regulated in the wake of the 2008 financial crisis.
The latest development calls for the Financial Conduct Authority (FCA) to lose enforcement powers and be replaced by a new body.
This was the recommendation of the Treasury Select Committee last month. The committee laid out a case for a new enforcement function should be set up outside the FCA and the Bank of England.
The select committee’s report said:
“The current system, whereby the same organisation both supervises, applies and prosecutes the law is outdated and can be construed as unfair. By moving enforcement away from supervision, it can focus independently on undertaking its key functions: interrogating evidence and assessing whether a regulatory breach has been committed.”
The select committee made their recommendations to address issues raised by the report into the collapse of HBOS late in 2015. The chair of the Treasury select committee went on to summarise why it was felt a new regulatory body would be the way forward.
“A separate body would bolster the perception of the enforcement function’s independence, and provide the regulators with greater clarity over their objectives. The case for separation merits serious re-examination. The Treasury should appoint an independent person to undertake a review.”
The request by parliament for a new regulatory body is not new, in 2013 the parliamentary commission on banking standards made the same suggestion. However, these suggestions were dismissed by previous Chancellor George Osborne.
FCA Regulation and Politics
Since the financial crisis of 2008 financial regulation and enforcement has been a topic of almost constant discussion within the political system.
There have already been changes to the system, but a strong political sentiment to go further remains.
Not only does the FCA have to oversee, apply a barrage of regulations the same applies to the banks. Alone running from 2016 through 2019 there will be MiFID II and MiFIR, Market Abuse Regulation (MAR), Capital Requirements Directive IV (CRD IV) and Capital Requirements Regulation (CRR), Basel III standards, UCITS V Directive (UCITS V), Alternative Investment Fund Managers Directive (AIFMD), Regulation on improving securities settlement in the EU and on central securities depositories (CSD Regulation), UK Banking Reform and this is to name a few.
The UK political landscape is turbulent at the moment and VIP Apps Consulting will be monitoring any proposed regulatory changes closely to ensure we are able to offer our clients in the industry the right technological solutions to any process changes that new regulation or enforcement changes may create. VIP Apps Consulting drives to ensure whilst we think about each regulation and the impact for our clients. We also strive to maintain a holistic approach to all current and future regulations; this ensures we are laying the correct foundations with our hand in hand with the business and the future impacts on the business.
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