Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

FSA says it will get tough on banks

by
16th Mar 2009
Save content
Have you found this content useful? Use the button above to save it to your profile.

The Financial Services Authority has unveiled plans for a more stringent approach to regulation for banks, vowing to carry out increased vigilance in its role.

In a speech last week, the watchdog’s chief executive Hector Sants warned that banks should be “very frightened” and said the FSA would move away from the self regulation system and instead focus on how banks handle risk, set aside capital and appoint senior management staff.

“The oversight process will have to be more rigorous and there will be greater constraints on the amount of risk they can carry”, Sants told Reuters.

He also said that the regulator would look more closely at the role played by senior management of institutions that had failed.

While no bank executives have been charged with wrongdoing as a result of the crisis, Mr Sants made it clear that the FSA did still intend to investigate their actions. The FSA can fine executives for misconduct and retains the power the ban them from the financial services industry.

“This new approach is bound to have implications for how firms resource their control functions including legal and compliance” said Sidney Myers head of financial regulation at law firm Berwin Leighton Paisner. He also told journalists: “Given the current economic climate this is likely to represent a major challenge for many firms”.

The FSA is expected to release a review of its working this week that will also include policy recommendations.

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.