The Treasury select committee has warned the development of the new regulatory architecture should not be rushed for fear of creating flawed regulation.
In a report released this morning, Financial Regulation: a preliminary consideration of the Government’s proposals, the committee says it is concerned about the risks of proceeding with “undue haste”.
The Government says it wants to introduce legislation for the structure in mid-2011 to minimise uncertainty for regulated firms. But the committee says making sure reforms are well thought through is more important.
The report says: “The aim of introducing legislation in mid-2011 appears optimistic and, if pursued too rigidly, runs the risk of compromising its quality.”
TSC chairman Andrew Tyrie (pictured) says: “It is vital to maintain the momentum for reform, but there is no point in flawed change. In any case, these proposals need to be considered in conjunction with the Independent Commission on Banking.”
The ICB was set up by the Government to look at structural reform of the banking industry and is due to report in September 2011, after the Government plans to publish a bill on the switch to the twin peaks system.
The report says the outcomes of Sir John Vickers’ commission may well have an impact on the shape of regulation needed and that “full regard” should be given to its proposals.
The report says: “The legislation to establish the new regulatory structure should be subject to pre-legislative scrutiny, over a reasonable timescale. Once introduced, the timetable for the bill should be generous enough to allow proper parliamentary consideration.”