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‘The future approach is already stuck in the past’

Accountancy network BDO claims the Prudential Regulation Authority’s future approach varies only slightly from the FSA’s and the change is being carried out in an effort to achieve regulatory credibility.

BDO partner Fiona Raistrick says most of the proposals in the launch paper revealed last week are already being practised by the FSA.

She says: “Sadly the planned ’future approach’ seems to be stuck in the past, reinforcing the view that the PRA exists only as a different vehicle to secure the City’s backing, which the FSA was unable to achieve.

“Looking at the big picture, being forward looking, focusing on risk governance, competency of individuals and financial stability have all been high on the FSA’s agenda since the crash.”

CMS Cameron McKenna partner Ash Saluja says the biggest change under the PRA is that it will look in detail at how financial institutions would cope in the event of insolvency.

He says: “The regulator will look at what would happen if an institution fails and how it would provide for orderly break up, what could cause it to fail, what can be done to mitigate against that and how management is dealing with those issues.”

During the launch, Sants said the biggest regulatory failure during the financial crisis was the “complete lack” of a mechanism to wind up financial institutions.

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