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FCA chief: Regulation has not stifled growth

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FCA chief executive Andrew Bailey has claimed regulation has not stifled economic growth and competition since the financial crisis.

In a conference speech in Berlin yesterday, Bailey defended the role of well-targeted regulation in promoting both stability, but also financial services competition.

Bailey said: “Regulation – both prudential and conduct – is in some circles regarded as an obstruction to growth and the competitiveness of finance. I don’t believe this to be the case if it is effective in its public interest objectives.

“The regulatory response to the crisis over the last 10 years has been directed towards creating conditions which support stability in finance, enable competition in the supply of financial services and ensure conditions where users – consumers – can reasonably expect conditions of fairness. These are essential basic conditions not nice-to-haves.”

Bailey also used the speech to call for higher level global regulatory standards to avoid frictions between different national and regional rulebooks that can put up barriers to free trade and the movement of capital.

He said: “But, do we have a regulatory system that does all it can to support free trade and capital mobility, bearing in mind the lessons of history that these are important conditions for economic growth? Not sufficiently is my view.

“Why? Because while we have done a great deal to develop global regulatory standards in the aftermath of the crisis, we have taken very few steps towards using those stronger standards as the basis to govern market access for financial firms. Our approaches remain national, or in Europe regional.”

“I want to pose the question, would it be possible to take a different approach and to base market access on common recognition of higher level global standards which are transparent and subject to regular review? Wouldn’t this be the best thing we could do to support the global economy. You won’t be surprised to know that I think the answers here are yes.”

Efforts are currently being made to harmonise European regulations through directives such as Mifid II, Solvency II and Priips.

However, there are fewer regulatory initiatives such as Basel III that attempt to set a global framework.

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