The FSA announces views on off-shore centres

He noted that ''there is some frustration among G7 finance ministers, and indeed amongst regulators, about the co-operation they get from some offshore financial centres''.

As a result, a group had been recently set up under the aegis of the Financial Stability Forum ''to review progress made by offshore centres in enforcing international prudential and disclosure standards, and in complying with international agreements on the exchange of supervisory information''.

It was, he said, too early to say with certainty how this work will develop, but ''my general forecast would be that the standards of regulation which will be demanded in the future will be higher than they were in the past. Furthermore there will be more pressure to make international regulatory co-operation work more effectively. There will be much less room in future for so-called unco-operative jurisdictions''.

As far as Jersey and the other Crown Dependencies are concerned the Edwards Report noted that they were ''in the top division of offshore financial centres'', but made a number of recommendations for change, including a clearer separation of regulatory and promotional responsibilities. In return, Mr Davies said, the report "looks to have been well-timed and well-judged" and implementation of its main recommendations will put the Dependencies in a much better position to respond to this heightened interest in offshore finance.

Mr Davies drew attention to ten principles which should underpin regulatory rgimes everywhere if they are to meet rising global standards:

a regulatory authority operationally independent from political and commercial interference; a clear framework of objectives and powers set by legislation; adequate funding in a form that does not compromise the authority''s independence; standards of corporate governance to protect clients'' interests and ensure proper management of risk; well-understood procedures for dealing with the failure of a market intermediary; comprehensive and credible inspection and enforcement powers; regulation designed to detect and deter unfair trading practices; powers to ensure compliance with anti-money laundering regulations; laws which ensure that no institutions operating across national boundaries escapes supervision; the power and willingness to share information with other authorities.

Notes for editors

The Government announced on 20 May 1997 that it would create a single regulator for all financial firms and markets and the FSA was formally launched on 28 October 1997. The FSA has assumed responsibility for the supervision of banks and supplies regulatory and other services under contract to the three Self-Regulating Organisations (SROs), the Building Societies Commission, the Friendly Societies Commission, HM Treasury''s Insurance Directorate and the Registry of Friendly Societies. These arrangements will continue until the new legislation comes into force. The creation of the Financial Stability Forum was agreed the by G7 Ministers and Governors in February 1999. It has two aims: the identification of early warning signals of possible market turbulence and promoting enhanced co-ordination of the responses by regulators to disturbances in financial markets. The Edwards Report - the Review of the Financial Regulation in the Crown Dependencies - was commissioned by the Home Secretary.