Plans to merge the UK Listing Authority and Financial Reporting Council could be sowing the seeds for a future crisis.
Giving evidence to the Treasury select committee this week, London Stock Exchange chief executive Xavier Rolet said he was “very comfortable” with the twin peaks model but going beyond a single unified prudential regulator would fragment regulation too far. He said: “To go back to some sort of, more or less defined tripartite system or worse environment probably sows the seeds for the next crisis.”
The plan would see the UKLA and the FRC merged into a new body looking at corporate governance under the Department for Business, Innovation and Skills, with the rest of prudential regulation falling under the Prudential Regulation Authority.
Rolet warned issues could fall between the cracks of the prudential regulators and the model would undermine the full set of responsibilities needed by the UK’s representative on the European Securities and Markets Authority. He said strong representation was needed to ensure the future of Aim against European calls for harmonisation.