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Regulation revolution on the way, Turner tells MPs

FSA chairman Lord Adair Turner has promised MPs a “revolution” in financial regulation with fundamental changes on their way.

During a grilling at the Treasury select committee last Wednesday, Lord Turner claimed the regulator had been put under political pressure not to be “heavy and intrusive” with banking regulation, and instead to use a “light-touch” approach.

He blamed the “political philosophy” of past regulation for missing the problems in now-nationalised banks.

Turner said: “We had a philosophy of how we did regulation, that focused on organisation structure, processes, systems – it fairly overtly said it was not the function of the regulator to cast questions over the overall business strategy of the institution. With hindsight, I find it surprising but it is the case.

“That existed in a political philosophy where all the pressure on the FSA was not, are you looking these business models, but to say, why are you being so heavy and intrusive, can’t you make the regulation light touch?”

But Turner assured MPs that the FSA recognises these faults and is changing the way it regulates. He said: “It is going to be fit for purpose, it is a revolutionary approach. It is a long way through necessary changes. Both us and the Bank of England should have a significant and formal role in macro-prudential analysis.”


A burden on societies

Last week, some of the biggest building societies posted profits, no mean feat in itself, but profits that were slashed by as much as 50 per cent thanks to Financial Services Compensation Scheme levies hiked up in the wake of the Icelandic bank crash and the Bradford & Bingley bailout.

Open season

The last few years have seen specialist annuity providers contracting directly with pension companies to provide annuities – the contention being that this offers better annuity rates.

New approach could veto senior appointments

FSA chief executive Hector Sants has said that the new regulatory approach to staff competency may not have allowed former HBOS director of group risk Jo Dawson to be hired by the bank.


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