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Labour slams financial sector’s resistance to regulation

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MEP and vice-chair of the Economic and monetary affairs committee Arlene McCarthy has accused the financial sector of not learning the lessons of the crisis and “kicking back” at regulation.

Speaking at a Smith Institute fringe event at the Labour autumn conference in Manchester yesterday, McCarthy warned that the industry could face more regulation in the face of repeated scandals.

She said: “When we had the BSE crisis the food industry recognised we needed regulation. The problem with this industry for the large part is that it is still kicking back at regulation without coming forward with alternatives, better ways to do it or self-regulation.

“We had to deal with the 2008 financial crisis and then we had a Libor crisis four years later, so consumer groups and people tell me we need to regulate more because the industry is not learning the lessons from the crisis.”

McCarthy also defended EU regulation from industry criticism and called on the industry to support a finanical transaction tax.

She says: “Everything we are doing is G20 agenda, it is not an EU agenda. Every single thing we are doing is agreed intermnationally although other countries may be doing it in different ways.

“Why are you against everything? Why not say; let’s have a financial transaction tax based on the model of UK stamp duty.

“We do not have common taxation in Europe so we could keep the money. It is one of the reasons we do not make our case very well with the industry and why lots of our colleagues are fed up with us. They think the UK pleads a different agenda. So much so that prime minister David Cameron wielded a veto.”

McCarthy echoed the views of Labour leader Ed MIliband by warning the industry to “self-regulate or we will do it for you”.

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Comments

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

  1. Does she know what she is talking about?
    This industry has been crippled by poor regulations!!! The FSA has done enough, good in some areas, poor in others.Regulate sensibly, first know what you want to do, its consequences and then do it! The customer is worse off now and the industry is in paralysis!

  2. Stop trying to regulate retrospectively and come up with a sensible regulatory system that is easy to understand by all.

    Stop ducking responsibility e.g. many in the industry would like to see products licensed but the regulator has clearly stated that there is not his job to license products. How can a consumer have faith in financial services when its own regulator will not take responsibility for licensing products.

    And advises job would be so much easier if products have the seal of approval of the regulator and also would mean that overall costs would come down as PI insurance would be reduced considerably.

    Enforcement against people who do wrong should be enforced by criminal law as well as the paltry fines handed out by the FSA. I think I read recently that an ex-bank director got fined £500,000 which when you consider the fact that he’s probably been paid many millions of pounds in bonuses is not even a parking ticket.

    Not all others in financial services are against regulation it is just we never get asked what our viewpoints is on creating a better system.

  3. I think she was mainly talking about banks. I feel that politicians aren’t even aware of IFAs and the impending legislation that threatens to obliviate them. FSA / FCA are still majoring on IFAs regulation and still going softly on the Banks – Wheatley “many of my friends are bankers”.

  4. If the regulator were to adhere to the Statutory Code of Practice for Regulators, then there wouldn’t be a quarter as much regulation to resist. The problem is in the hands of the regulator itself, not minorities oppressed by the regulator’s frequent misuse of its powers. To quote:-

    The Regulators’ Compliance Code is a central part of the Government’s better regulation agenda. Its aim is to embed a risk-based, proportionate and targeted approach to regulatory inspection and enforcement among the regulators it applies to.

    Our expectation is that as regulators integrate the Code’s standards into their regulatory culture and processes, they will become more efficient and effective in their work. They will be able to use their resources in a way that gets the most value out of the effort that they make, whilst delivering significant benefits to low risk and compliant businesses through better-focused inspection activity, increased use of advice for businesses, and lower compliance costs.

    I rest my case.

  5. Typical soundbites from a party still blaming everyone else for the state of country’s finances apart from themselves.

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