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Monday 13th February 2012 | 17:50
The Financial Services Bill, published a fortnight ago, plans to reform the way in which these services are regulated. The FSA will be split in two – with a new body to regulate consumer affairs and another to look at the health of individual firms. The new Bank of England Financial Policy Committee will also be given an explicit responsibility to assess risks to the system as a whole.
Got it? Good. Financial services regulation might sound a dry issue to most political pundits. Indeed, five years ago, it would have been completely ignored (therein lay the problem). But in a political climate where the world’s economic woes are laid squarely on ‘greedy bankers’, who are seen by some to have escaped from the crisis scot-free, such measures are big politics.
As we’ve written before, the Coalition government needs to walk the tightrope between satisfying the public rage and not taking measures so drastic that financial services institutions relocate to less draconian regulatory systems. Above all, however, they will want to create a regulatory model that actually works and prevents a repeat of the 2008 financial crisis.
A new Dods PoliticsHome/CityAM poll, suggests the City is highly sceptical on this latter point. Asked whether the proposals the government has put forward would help prevent such a repeat, just 19% agreed, with 54% disagreeing. Just 35% thought it would lead to better regulation against 39% who did not.
As to the potential problems caused by the bill, 56% of the City were concerned about its impact, with two thirds concerned about upheaval that may result from the changes proposed.
Politically, the scepticism of the City towards the legislation may be no bad thing for the Government – but if the regulatory changes brought forward are widely seen to be ineffectual, they will be fraught with political problems.