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FCA chief: Regulation has not stifled growth

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FCA chief executive Andrew Bailey has claimed regulation has not stifled economic growth and competition since the financial crisis.

In a conference speech in Berlin yesterday, Bailey defended the role of well-targeted regulation in promoting both stability, but also financial services competition.

Bailey said: “Regulation – both prudential and conduct – is in some circles regarded as an obstruction to growth and the competitiveness of finance. I don’t believe this to be the case if it is effective in its public interest objectives.

“The regulatory response to the crisis over the last 10 years has been directed towards creating conditions which support stability in finance, enable competition in the supply of financial services and ensure conditions where users – consumers – can reasonably expect conditions of fairness. These are essential basic conditions not nice-to-haves.”

Bailey also used the speech to call for higher level global regulatory standards to avoid frictions between different national and regional rulebooks that can put up barriers to free trade and the movement of capital.

He said: “But, do we have a regulatory system that does all it can to support free trade and capital mobility, bearing in mind the lessons of history that these are important conditions for economic growth? Not sufficiently is my view.

“Why? Because while we have done a great deal to develop global regulatory standards in the aftermath of the crisis, we have taken very few steps towards using those stronger standards as the basis to govern market access for financial firms. Our approaches remain national, or in Europe regional.”

“I want to pose the question, would it be possible to take a different approach and to base market access on common recognition of higher level global standards which are transparent and subject to regular review? Wouldn’t this be the best thing we could do to support the global economy. You won’t be surprised to know that I think the answers here are yes.”

Efforts are currently being made to harmonise European regulations through directives such as Mifid II, Solvency II and Priips.

However, there are fewer regulatory initiatives such as Basel III that attempt to set a global framework.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. This is, quite simply, untrue.

    Having to meet the red tape requirements of regulation is stifling many businesses as it reduces the time spent on assisting clients. Additionally, my own business had to wait 7 months before it could switch from partnership to limited company, a period of economic limbo that assisted nobody.

    Truth is, the FCA is an unnecessary encumbrage.

  2. It hasn’t taken him long to get comfy with those rose tinted specs has it ?

    You keep telling yourself and government that Andrew…. it will come right in the end, the ability to ignore and be blind to reality, is the one real skill of a true bureaucrat.

  3. “Bailey said: “Regulation – both prudential and conduct – is in some circles regarded as an obstruction to growth and the competitiveness of finance. I don’t believe this to be the case if it is effective in its public interest objectives.” He may be right however the little word “if” he uses in the last sentence has a very big bearing on the statement. If Mr Bailey thinks that his regulator has been effective, either as the FCA or the FSA then I am sorry, but I would question his appropriateness for him to be in his position. The list of ineffective, inappropriate behaviour of the regulator over many years is huge. So I really cringe if he actually thinks his words ring true here in the real world.

  4. I’m quite willing to accept that well-targeted regulation could promote both stability and financial services competition. The problem is that well targeted regulation is the very commodity that the FCA has manifestly FAILED to deliver, hence the industry is presently mired in so many massive problems. Start with Connaught and work back…

  5. The last 10 years of regulation, ahem…. “creating conditions to support stability in finance..” When I last looked the financial crisis happened less then 10 years ago, or are the FCA giving us the “alternative facts”? All in all looks like a pitch to increase the FCA’s regulatory remit in concert with global regulators and keep the gravy train rolling along for Andrew Bailey and his friends. I haven’t seen the whole speech but looks like a typical trumpet-blowing exercise.

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