The chief executive of the Financial Conduct Authority has disputed the idea that regulation hampers growth and competitiveness.
Speaking in Berlin to the Economic Council Financial Markets Policy conference, Andrew Bailey said regulators need to do more to support free trade.
In his speech, Mr Bailey called for a more global regulatory system of standards to govern market access for financial firms.
He said: “Regulation – both prudential and conduct – is in some circles regarded as an obstruction to growth and the competitiveness of finance. I don’t believe this to be the case if it is effective in its public interest objectives.
“The regulatory response to the crisis over the last 10 years has been directed towards creating conditions which support stability in finance, enable competition in the supply of financial services and ensure conditions where users – consumers – can reasonably expect conditions of fairness.
"These are essential basic conditions not nice-to-haves.
“But, do we have a regulatory system that does all it can to support free trade and capital mobility, bearing in mind the lessons of history that these are important conditions for economic growth? Not sufficiently is my view.
“Why? Because while we have done a great deal to develop global regulatory standards in the aftermath of the crisis, we have taken very few steps towards using those stronger standards as the basis to govern market access for financial firms. Our approaches remain national, or in Europe regional.”
Mr Bailey said there is currently pressure to “go in the other direction” by limiting market access, but he said this would be a “big mistake”.
He said: “We are at a very important point in terms of how we can best deploy public policies to support economic growth. Free trade and open markets remain in my view the best approach to secure stronger growth.
“But with free trade comes a number of critical questions on the best supporting policies. My view is that open financial markets are the best way to support trade in goods and services.
“We could take a big step in that direction by using global regulatory standards as the basis for market access around the world.”
