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uk financial regulation (building britain’s future) July 8, 2009

Posted by Bradley in : financial regulation , trackback

As part of the ongoing restructuring of financial regulation, the Chancellor announced new proposals for changing financial regulation (the full document is here (with the Building Britain’s Future logo on the front)). The Chancellor wants:

better informed consumers, who have greater choices, in a more competitive market

In order to help consumers there’s a proposal to consolidate existing FSA resources to provide separate independent consumer education. It’s not clear exactly what this means. But it’s supposed to “empower” consumers. The full document says there is to be a national money guidance service (more of what is being done already, but there is a consultation in an annex to the document which asks for reactions) and that there are to be simple financial products available:

so that there is always an easy-to understand option for consumers who are not looking for potentially complex or
sophisticated products.

Of course this doesn’t guarantee that consumers will choose the simpler products (tellingly, in the consultation section there’s a question asking why some simpler products don’t sell well), or that they will be more suitable to any particular consumer than more complex products. And strikingly to someone based in the US, the section of the report dealing with remedies for consumers states:

The Government believes that the emphasis should remain on ensuring that firms compensate the consumer voluntarily.

There’s a lot more, including proposals for more effective (not better) regulation (in the report there are some references to the idea of better (in the sense of more effective) regulation), and a new proposal for a Council for Financial Stability — which will bring together the Bank of England, the FSA and the Treasury, with some references to governance arrangements (interesting in the light of the IMF’s recently published working paper on financial regulator governance arrangements). The FSA is to be given a new statutory duty to promote sound international regulation and supervision, and there’s a promise to propose to the G20 in the fall arrangements for workouts for large multinational banks.

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