Bank of England governor Mervyn King has warned that regulation of banks has become too much of a “negotiation” rather than a case of regulators laying down the law.
Speaking at the second Which? Future of Banking Commission in London last week, King called for the financial regulators to look to other industries’ regulators to reform the banking industry.
He said: “This is not a criticism of FSA, this is a criticism of Parliament for not looking at financial regulation in terms of the same sets of issues.
“What is it a regulator can reasonably achieve? What are the small number of key objectives the regulator should have?What are the key things that the regulator should try to ensure that the industry can always provide, irrespective of which firms are actually there.
“Rather than this form of regulation that focuses on retaining all the firms in the industry, by which regulation turns into negotiation between regulator and firms, we need a laying down of a very clear and simple set of rules in which firms can operate.”