FSA Chairman calls for a strengthened network of European regulators

Speaking at the Eurofi conference in Paris, he said:

The single market in financial services is not yet delivering its full potential benefits for capital raisers or for consumers of financial services. Markets remain fragmented, and there are still many internal barriers, both informal and formal. So what changes are needed?

In our view the key near-term priorities are:

• To speed up the legislative process in Europe. It is absurd that, even with a fair wind, a new Directive scarcely ever takes less than three years between inception and delivery. This lengthy gestation period is not matched anywhere else in the animal kingdom; and

• We need to strengthen the network of European regulators to make them more effective and, indeed, to give it more teeth. These two points are, in practice, closely linked.

He went on to outline five points relevant to the debate on financial regulation:

• Even without regulatory harmonisation, cross-border business in financial services is developing quite rapidly.

• In financial markets, the EU is not an island. Financial transactions between EU markets and the rest of the world are just as important as those within the EU. Some of the biggest institutions establishing pan-European networks of one sort or another are domiciled outside Europe.

• Regulation, in the sense of what financial regulators do, is not the only barrier to the full development of a single market in financial services. There are very many other obstacles, whether cultural, or in the legal systems, the tax systems or other legislation within member states which militate against the free movement of capital.

• Some of the difficulties involved in achieving greater harmonisation of financial regulation, or enhanced procedures of mutual recognition, lie in the complex regulatory arrangements within member states. In looking at pan-European reform, we should not forget the national dimension.

• It is important to recognise that there is a considerable degree of co-operation between regulators already. This co-operation is beginning to accelerate through groups like FESCO for securities business, the Groupe de Contact for banking supervisors and the Insurance Conference for insurance regulators. Regulators are very much aware of the pace of change within the industry and are therefore inspired to work towards greater convergence themselves.
  

Notes for editors

1. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

2. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

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Appended information

This speech is available from the publications section of our web site. The direct URL is http://www.fsa.gov.uk/Pages/Library/Communication/Speeches/2000/sp57.shtml.