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BSA says new financial regulation rules are anti-competitive

Building Societies Association director general Adrian Coles has told MPs that the proposed changes to financial regulation are anti-competitive and conflict with the Government’s commitment to sector diversity and the promotion of mutuals.

Speaking this week at a Treasury select committee evidence session, Coles (pictured) said the new regulatory framework will hit smaller firms with significant cost increases.

He said: “The regulation discussion document from the Treasury makes it absolutely clear there will be significantly increased running costs for small institutions. We can envisage a situation where there will be three regulators plus Europe, issuing consultation papers on the mortgage market, for example. It will not be an easy system to navigate for many firms.”

Coles said the extra regulatory costs would have to be passed on to the consumer.

British Bankers’ Association chief executive Angela Knight said: “Smaller institutions are quite significantly affected by the current environment, let alone the new environment which is ratcheting up costs and so limiting their ability to conform without themselves getting larger in some way.”
She added that the proposed seniority of the Prudential Regulatory Authority over the Consumer Protection and Markets Authority could make smaller institutions feel “distant” from decision-making.

Coles and Knight agreed that high quality supervisors are more important than the structure of regulatory bodies.

Knight said: “What makes future crises less likely is more than just changing the structure. It is greater liquidity in the system and by institutions, better management and risk control by the separate and individual major institutions, better co-ordination across borders and better supervision. Supervision is not just a set of rules and whether they are right or wrong, it is a far more holistic approach which needs to be taken.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. And heres me thinking there was to be a “bonfire of the quangos” ?

  2. Whilst I can sympathise as an IFA that has been subjected to considerable regulation in recent years, I cannot help feeling a sense of poetic justice towards that the Banks and Building Societies that in comparison have been a law unto themselves!

  3. Yeah, we (the IFA sector) have been complaining about biased, excessive, unaccountable and hugely expensive regulation for years but until recently no one seems to have been interested in taking a blind bit of notice.

    Maybe now the BSA and the BBA are starting to make some noise, things may finaly start to change.

  4. RDR is anti-competitive under EU Law!

    European Union law operates alongside the legal systems of the European Union’s member states and where conflict occurs, takes precedence over national law.

    Does such a conflict exist? All 3 aspects of the RDR – prescribing the conditions for a firm being able to hold itself out as “independent”; prescribing methods of remuneration; prescribing criteria for competence – are super-equivalent to comparable provisions in the Markets in Financial Instruments Directive aka (MiFID).

    Under EU law super-equivalence is not permitted, which is why the FSA are unable to apply their proposed rules to inwardly passporting firms, as this would bring the FSA into direct contravention of Article 31 of the L1 Directive (2004/39/EC). NB: Firms passport into the UK from the EU just as UK firms can passport into EU states via the UK. This two way traffic is the corner stone of EU law and the principle of trading harmony.

    This is why the FSA have confirmed they will not be applying the RDR rules to firm’s exercising Article 31 rights in their draft notification to the EC (ref CP09/18 Ann B pars 26 and 51).

    EEA investment advisers will be able to provide investment advice to UK customers under the more relaxed MiFID regime, but UK advisers will be restricted in providing the same MiFID service to their own UK customers.

    OK So lets see our regulators operate under EU Law even if the are above UK Law!!!!!!!!!

    SIMON MANSELL

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