The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Regulation: Improving on the FSA

There was no chance that the UK’s Financial Services Authority would emerge from the recent financial crisis without a fundamental overhaul of its culture, objectives and procedures. But did it need to be scrapped altogether? And if it did, will the new model work any better? Dawn Cowie reports.

SINCE THE DEMISE of the UK’s Financial Services Authority was announced by the coalition government in July, the banking industry seems to have developed a sudden affection for the institution that it has loved to hate for the past 13 years.

There is no doubt that the financial crisis exposed big defects in the FSA’s supervision of the banks and financial markets, particularly its complete failure to spot systemic risks building. Its own internal audit of its supervision of mortgage bank Northern Rock is a damning indictment of its approach.

The report found that there had been a lack of engagement with the firm; insufficient checks by FSA management to ensure the quality of supervision; inadequate resources dedicated to the task; and a failure to use risk information effectively to inform its actions.

However, many in the industry argue that the Northern Rock report is an excellent example of how Hector Sants, the FSA’s chief executive, has done well in setting the new tone for UK regulation and engaging with banks on issues such as the new stress-testing regime. So is the scrapping of the organization justified?

“Having made the decision to restructure the FSA, they should do it as quickly as possible”

David Kenmir, PricewaterhouseCoopers

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree