Speaking this week at the Apcims conference in London, Economic secretary to the Treasury Kitty Ussher said the Government, as well as the FSA and Bank of England, had lessons to learn and told delegates the Chancellor will propose a number of international reforms aimed at preventing a repeat situation.
She said Alistair Darling will call for an examination of the role and firm’s own use of credit ratings, investigate the treatment of off-balance sheet vehicles and urge faster implementation of Basel 2 standards on capital adequacy.
She said any changes the Government proposes would be guided by the principles that primary responsibility for managing risk is, and must remain, with individual institutions and investors, that strong national regulatory frameworks had to back this up and that different countries had to co-operative effectively cross-border.
She said the FSA has acknowledged that a review of the length of time between its full supervisory assessments was needed but stressed that more changes may be required.
She said the Government’s discussion document, Banking Reform- Protecting Depositors, would investigate the options for the future shape of the Financial Services Compensation Scheme.
She said the Northern Rock episode would not put in jeopardy the Government’s moves to more principle based regulation and pledged there would be no knee-jerk reaction to create a “Sarbanes-Oxley for Britain”.
She also attacked criticism from other countries that UK financial services regulation was not up to scratch.
She said: “So if others want to put it about that the UK has got it wrong, let them; I’m happy if they are complacent. Because in the meantime, we’ll keep building on our success.”