The reform of financial regulation has a real impact on society well beyond the square mile, Angela Knight told a gathering of business analysts today.
Regulatory change fundamentally affects the way banks do business, the British Bankers’ Association chief executive told delegates to the Institute of Economic Affairs State of the Economy conference. It therefore has a real impact on businesses and individuals – a fact that is not reflected in public debate on regulatory reform.
She said:
“Although the bricks and mortar of banking buildings that face the world may look the same, a huge amount of change has taken place behind. The banks are now operating with more capital and liquidity, with top to bottom changes to risk control and transparency in ethics and in governance. They have made major changes to remuneration, they are much more transparent and understand - and are committed to meeting - their societal obligations.
“But the simple truth for any business is that you cannot increase its fixed costs of being in business without it having an impact on the cost and availability of services. The implementation of new standards early and, the super-equivalent way in which the UK has applied existing European and other requirements, not only means that there is a constraint on the international competitiveness of the banking industry in this country compared to others, but most importantly it flows directly through to an impact on the economy and economic growth.
“We can not continue down a path that says regulatory changes do not have an impact on anything other than banks themselves. Where changes have a societal impact, they need to be discussed from that perspective. It cannot be ignored or parked on the industry as if it is an industry-only problem. If a decision is being taken which says that in the interest of stability we must restrict loans and mortgages, then so be it. But that is a policymaker’s decision; it is not a decision of the banks.”
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Regulatory Reform Is Important For Everyone, BBA Tells Businesses
Date 17/02/2011