Developments in voluntary self‐regulation
| Published date | 01 January 1998 |
| Date | 01 January 1998 |
| Pages | 31-38 |
| DOI | https://doi.org/10.1108/eb024954 |
| Author | Nicola Jamison |
| Subject Matter | Accounting & finance |
Journal
of
Financial Regulation
and
Compliance
Volume
6
Number
1
Developments in voluntary self-regulation
Nicola Jamison
Received: 1st October, 1997
The
Building
Societies
Association, 3
Savile
Row,
London
W1X 1AF; tel: 0171 437 0655;
fax: 0171 734 6416.
Nicola Jamison is Senior Legal Adviser at
The Building Societies Association (BSA).
She previously worked also for the Council
of Mortgage Lenders (CML), until the
demerger between the two organisations
at the end of 1996. At the CML, she was
responsible for drafting the new Mortgage
Code; at the BSA, her responsibilities
include the third edition of The Banking
Code. She is a graduate in law from the
Queen's University of Belfast, and pre-
viously worked for Lloyds Bank.
ABSTRACT
This paper examines the swathe of voluntary
self-regulation which affects the day-to-day
operation of banks' and building
societies'
retail
businesses, especially in the light of the new
Council of Mortgage Lenders (CML) Mort-
gage Code and the third edition of The Banking
Code, and examines whether such self-regula-
tion can be an effective alternative to legislation.
INTRODUCTION
This paper considers the culture of 'volun-
tary' self-regulation in the retail financial
services sector today. It does not cover
'compulsory' self-regulation, such as the
current arrangements of the Personal
Investment Authority (PIA) etc but looks
at the plethora of codes and statements of
practice in force, focusing especially on
'The Banking Code' and 'The Mortgage
Code'. It also looks at what makes a good
code and ends by examining what compli-
ance checks are in place to ensure that the
codes are properly implemented and
adhered to.
WHY SELF-REGULATION?
Before examining the range of voluntary
measures that banks and building societies
have voluntarily agreed to tie themselves
to,
it is perhaps worth examining briefly
why we bother with codes at all. Why not
just go for the certainty of legislation?
Obviously, the main advantage is that
codes tend to be written by the industry
for the industry so, even with wide consul-
tation and input from government and
consumer groups, the final result is some-
thing which is more focused to the needs
and practices of the industry and, of
course, its customers. However, another
key advantage is that self-regulation is flex-
ible.
Recent history has shown only too
clearly the disadvantage of being subject to
a detailed prescriptive regime, for example
the Financial Services Act 1986 (FSA).
Also,
in answer to those who claim that
legislation is at least certain, one only has
to consider the unsatisfactory situation that
has arisen from the inflexible advertising
regulations made under the Consumer
Credit Act 1974 (CCA). County court
decisions on actions on what to take into
account when calculating the APR on dis-
counted and fixed rate mortgage products,
brought by trading standards officers in
dif-
ferent areas of the country, giving different
Journal of Financial Regulation
and Compliance, Vol. 6, No. 1,
1998,
pp.
31-38
© Henry Stewart Publications,
1358-1988
Page
31
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