The BBA today publishes a new report which calls for a more coordinated global system of regulation for the banking industry.
The regulatory regime governing the world’s financial markets is rightly being fundamentally recast in response to the financial crisis. The changes have been far-reaching and profound. Led by the G20, policymakers have shown a desire and willingness to coordinate their actions to reflect the fact that global markets are now more seamless than ever before.
Five years on from the recognition of the need for a coordinated response to the financial crisis, this report uses three case studies to examine if the ambition of a coherent global regulatory framework has been achieved and explores the consequences that inconsistent regulation can have for banks and their customers.
The reports central recommendations are that:
- David Cameron, Barack Obama and other G20 leaders should set priorities to achieve greater regulatory consistency.
- The Financial Stability Board should be strengthened to become a truly global standalone resource, seeking out areas where more consistent regulation is needed and identify possible divergence at an early stage.
- The Transatlantic Trade and Investment Partnership (TTIP) should be used to establish a mechanism to incentivise regulators to enhance the coherence of US and European regulation. It should provide a framework to allow governments on both sides of the Atlantic to monitor cross-border financial markets.
Commenting, BBA Chairman Sir Nigel Wicks said:
“The divergence of regulatory approaches in the international financial markets poses challenges for banks and customers.
“Higher costs of complying with the different rules make financial products for businesses and retail customers more expensive. Disparate regulatory frameworks also encourage providers to withdraw products and services from some countries, thereby undermining clients’ choice.
“So we are asking the G20 to do more to reduce the undesirable consequences of international regulatory divergence. This will help to achieve a stable, equitable and open financial system that supports the development of the global economy in way that benefits as many people as possible.”
