The Great Debate UK
–Tim Dolan is a Partner in the Financial Markets team in King & Wood Mallesons SJ Berwin’s London office. The opinions expressed are his own.–
With the Financial Services Authority (FSA) already replaced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), what use does the UK have for another new financial sector body, the Banking Standards Review Council?
The Banking Standards Review Council (BSRC) will not be a regulator, providing day-to-day supervision of banks, it will review the progress that banks make in improving their culture, competence and customer outcomes, and report on that progress to the public annually.
The BSRC will review individual banks’ standards of good practice, such as whistle-blowing protocols, suggestions about appropriate retail sales incentives and processes for handling businesses in distress. It will focus on increasing the value placed on industry qualifications and encouraging good practice in learning, development and leadership, and it will meet with each participating bank’s non-executive directors on an annual basis to discuss their progress in meeting desired outcomes.
In 1873, Walter Bagehot wrote that "the business of banking ought to be simple; if it is hard it is wrong." He would have struggled to recognize today's banking system.
It is not just ever more ornate derivatives that bend the mind. Financial firms themselves have become fabulously complicated. Citigroup lists 2,061 subsidiaries and affiliates while the institutional chart of JPMorgan Chase is 267 pages long.