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The Turner review
ACCA welcomes measured proposals
23 Mar 2009
ACCA has responded positively to plans to reform the way the UK financial services sector is regulated.
In welcoming the report by Lord Turner, chairman of the Financial Services Authority, ACCA considers the need to look forward, rather than focusing on past failings, is essential in ensuring the new regulatory regime is thoroughly thought through, is consistent with G20 deliberations and includes a robust early warning system.
'In future, we need a system where sound regulation, supervision and good corporate governance reinforce each other,' said Dr Steve Priddy, ACCA director of technical, policy and research. 'The UK and its citizens will benefit from a profitable and more stable financial services sector which supports long term economic well being for itself and its stakeholders. While we prefer a market solution rather than a regulatory answer to the other contributory factors, ACCA urges regulators to consider the problem as a whole.
'It is essential that published accounts help contribute to financial stability. Lord Turner's analysis of the challenge posed by the need for accounts - which are both meaningful at an individual level and at a macro level - appears to be sound. His proposal for an Economic Cycle Reserve is both interesting and worthy of debate. ACCA will be pleased to help facilitate such debate.'
ACCA agrees with the International Monetary Fund’s (IMF) recent assessment of the regulatory causes of the market failure, which highlighted financial regulation that could not identify risk concentrations and flawed incentives, macroeconomic policies that did not consider the systemic risks in the financial system and the housing markets, and a fragmented global surveillance system.
There are other factors - particularly failings in corporate governance - which have contributed to the current crisis, and ACCA is to prepare a comprehensive response to Lord Turner's proposals and discussion paper, including suggestions for the effective interaction of regulation with good corporate governance.