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Lord Mandelson: Threat of more regulation is destabilising

Former business secretary Lord Peter Mandelson has hit out at the repeated threat of additional financial regulation, saying it could destabilise the financial system.

Speaking at the National Association of Pension Funds conference in Liverpool today, Mandelson said the financial system must be made productive.

He said: “Perpetual debate about acceptable safeguards, about what further inquiries are needed into the past, and repeated threats of regulatory change in the future run the risk of simply de-stabilising the financial sector without bringing about additional beneficial change within it.

“We will not secure economic growth without banks and capital markets capable of funding it. So let’s digest and fully implement the current reforms and then make stability the priority to ensure finance gets back on its feet.”

But the former Labour MP said the FSA should have been “more intrusive” in its regulatory approach before the financial crisis.

He said: “The interrelationships between the FSA, the Treasury and the Bank of England were untested, and when they did come to be tested it was by the most almighty, unprecedented shock imaginable.

“The knowledge of the regulatory system was not adequate for the task they had to take on and I do not think their supervision was intrusive enough.

“I do not think the intensity of the regulatory system was keeping pace with the growing complexity of the financial products it was regulating.”

Mandelson also backed Sir John Vickers’ recommendations to ring-fence retail banking from investment arms and tougher rules over banking ethics and culture.

He said: “[We need to return to a time] when conflicts of interest did not abound, when practices were not driven by extreme financial engineering and profit-making and when companies and individuals could rely on financial advice that was truly independent and objective.”

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Comments

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

  1. What we need is less interference from the regulator, sound products from the providers and to be allowed to advise honestly to our needy clients. Instead of all the hoops and hurdle that we have to jump over and through to satisfy political interference and ineptitude.
    Worlds gone mad at our expence

  2. Every time something bad happens new regs are put in place to prevent it happening again. What you end up with is a protective bubble that will burst catastrophically when it eventually fails. Common sense is needed not overprotective legislation.

  3. I’m shocked! I never would have believed I would be agreeing with the Dark Lord, he who must not be named.

    Constantly regulating for perfection is driving the ‘quite good and honest’ out of business.

  4. Exactly why is Lord Mandelson now criticising the FSA and the huge regulatory burden we all bear, when it was his government who screwed it all up by getting rid of Fimbra and Lautro, two perfectly good regulatory bodies and set up the PIA and then the FSA.?

    Nowt so daft as those who spout about things they screwed up in the first place, he should stick to what he knows best. What is that exactly ?

  5. Actually, Ned, John Major was Prime Minister when Lautro and Fimbra were scrapped.

    So you can only blame Mandy’s lot for the raid on pensions, introducing the Data Protection Act so that advisers had to destroy their records then allowing Tiner, Davies, Merricks, Sants, Turner (no relation to me!), Merricks and Ceeney to withdraw the long stop defence.

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