Banks stress need for international cooperation on reform

In its response to the Financial Service Authority’s Turner review, which set out proposals to tackle the global banking crisis, the British Banker’s Association (BBA) has expressed concern that the impact of its suggestions needed to be considered broadly rather than in isolation.

The BBA has also stated that is wished to ensure that British banking is not prevented from recovering, growing and playing its full part in the UK’s economic recovery by being subject to mismatched UK and international regulation.

As such, the BBA has released a series of recommendations with regard to the proposed reform of UK banking regulation. These include a recommendation that more work needs to be done on the impact of the raft of different measures under consideration on the banks’ ability to finance British businesses.

In addition, the BBA has recommended that the FSA should not forge ahead with plans to regulate UK banking in isolation as it argues that this could damage UK competitiveness and upset cross-border services. It believes that if UK regulation does not dovetail with action planned in Europe, the UK banking sector being caught between the two.

Chief Executive Angela Knight said:

“The British Bankers’ Association’s key message to the FSA on its plans for future banking regulation is that much more needs to be done to work out the impact of the measures it is proposing.”

“The banking industry is fully supportive of the need to change and overhaul the regulatory framework. But we do not believe the UK can plough ahead with change all on its own without thought to how changes here will work with plans afoot elsewhere. Banking is a global business and – like a game of chess – moving one piece anywhere on the board will influence the game somewhere else.”

“We also need to be clearer on how much this will all cost and how the changes can be phased in so the banking industry plays its full part in the UK’s economic recovery while still supporting its business and personal customers.”