LibDem peer Lord Newby says the new regulators’ culture, not structure, will be the key to their success.
Newby sits on the Parliamentary committee scrutinising the draft Financial Services Bill, which proposes breaking up the FSA and replacing it with the Prudential Regulation Authority and Financial Conduct Authority.
Speaking at a fringe event at the Liberal Democrat conference in Birmingham last week, Newby said people should “not expect too much” from the new structure, adding that the culture among regulators is “more important” than the architecture.
One element of the new set-up that has been raising concerns is the financial policy committee. The Treasury select committee has said it is worried about staffing of the FPC, the lack of a quantifiable target similar to the 2 per cent monetary policy target and the socioecononic impact of the tools it will wield.
But, speaking to Money Marketing, Newby said evidence to the Parliamentary committee from Financial Times US managing editor Gillian Tett gave members some comfort.
He said: “Gillian thinks the FPC would be an intelligent, flexible mind looking at prudential issues and because it brings in people from outside it will be likely to be more effective than just the regulators looking at it.”
Treasury select committee member Lord Thurso says changing the culture is the chief executive’s job and he is confident that PRA chief executive designate Hector Sants is up to the task.