Your IndustryOct 23 2014

BoE and Fed lead the way in new agenda

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The regulatory agenda in Europe has been “heavily led” by the US Federal Reserve Bank and the Bank of England, with the European Central Bank playing catch-up, Douglas Flint, group chairman of HSBC Holdings, has said.

Giving evidence to House of Lords EU Economic and Financial Affairs sub-committee inquiry into the EU Financial Regulatory Framework, Mr Flint said: “The agenda is heavily led by the Fed and Bank of England, with significant support from the Swiss and Dutch regulators.

“But the ECB will emerge over time as an increasingly important global institution, so its voice will be as important as the Bank of England’s is today.”

Mr Flint added there had been much focus on banks in the current EU financial framework but there needed to be a more “general focus on the system” to give regulation the ability to “shape the system that we want”.

In July, the parliamentary sub-committee launched an inquiry into the EU financial regulatory framework, with a view to assessing whether it was sufficiently robust to prevent future financial crises.

However, Liz Field, chief executive of the Wealth Management Association, criticised the EU financial framework. She said the lessons learned from the financial crisis had not been implemented in a way to ensure the new framework could predict or deal with the causes of the next crisis.

Ms Field said that European institutions tend to be inflexible in their approach, and lack sufficient coordination procedures, especially at informal levels, to ensure a fully coherent view of outcomes could be achieved.

In its own parliamentary committee briefing earlier this year, the WMA provided evidence to suggest that many of the reforms implemented since the financial crisis had failed to differentiate between different financial sectors, which meant it was having an adverse effect on business areas that did not need to be reformed.

Ms Field added: “The increasing use by EU legislators of EU-wide regulations rather than directives can affect local retail markets adversely. There is not an appropriate balance between member states and the EU in regulating and supervising parts of the financial sector.”