The new Financial Services Authority: Plans for implementation
| Pages | 150-158 |
| DOI | https://doi.org/10.1108/eb024965 |
| Date | 01 February 1998 |
| Published date | 01 February 1998 |
| Author | Andrew Hilton |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 6 Number 2
The new Financial Services Authority: Plans
for implementation
Andrew Hilton
Received: 20th January, 1998
The Centre for the Study of Financial Innovation, 18 Curzon Street, London W1Y 7AD;
tel:
0171 493 0173; fax: 0171 491 4473.
Andrew Hilton is director of the Centre for
the Study of Financial Innovation, a
London-based think-tank that he co-
founded in 1993. He also runs a small eco-
nomic advisory service. Prior to setting up
the CSFI, he worked, inter alia, for the
Financial Times in New
York,
for the World
Bank in Washington and as an economic
consultant in Athens. He holds an MA from
Oxford, an MBA from Wharton and a PhD
from the University of Pennsylvania. This
is an amended version of a paper given to
an IBC conference on regulatory reform at
the beginning of December 1997.
ABSTRACT
The UK is undergoing a revolution in the
structure of financial regulation that is being
closely watched — but not
necessarily
emulated
— around the
world.
The motivation for
change was clear and, by and large, implemen-
tation is taking place in an admirably transpar-
ent way. But there must be real
concerns
about
the relationship between the new Financial Ser-
vices Authority and the Bank of England, the
'consumerist' orientation of the new legislation,
the
funding of the new regulatory structure and
the regulation of
complex
groups.
INTRODUCTION
The structure of financial regulation — in
the UK and, indeed, more widely — is a
subject of enormous interest at the
moment. In New Zealand an innovative
regime based on transparency, rather than
prescriptive regulation, is under close poli-
tical scrutiny. In Australia a new regime
based on separate conduct of business and
prudential regulators is under consideration
and in the USA a new regulatory structure
is emerging by administrative fiat, as much
as legislative action. Everywhere, the fun-
damental tenets of financial regulation are
up for re-evaluation. In Europe, a debate is
starting over just what role the European
Central Bank will have in the regulatory
area.
But it is in the UK that the debate is
furthest advanced, with a new Bank of
England Act already operative and a new
Financial Services Act under active discus-
sion. This is an astonishingly open process,
and practically every think-tank and inde-
pendent commentator has had a say. The
Centre for the Study of Financial Innova-
tion (CSFI) has, for instance, already been
involved in the debate for a couple of
years,
sponsoring several conferences on
regulatory reform and holding half a
dozen round tables. In addition, the CSFI
published two papers by Michael Taylor
(now of the ISMA Centre at the Univer-
sity of Reading), advocating a new struc-
ture based on a split between the
regulation of systemic risk and conduct of
business rules (much as was recommended
Journal of Financial Regulation
and Compliance, Vol. 6, No. 2,
1998, pp. 150-158
© Henry Stewart Publications,
1358-1988
Page 150
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