Financial regulation reform in UK

As a global financial centre, UK also suffers from shock in this crisis, so it needs financial regulatory reform. Before this crisis, UK has established a set of complete financial supervision system, Andrew (2010) believes that Bank of England did well in capital adequacy and liquidity, but in terms of bank fraud and risk management, it is bad. UK should repair the existing financial regulation system and cooperate with other countries to regulate. What’s more, government need to consolidate the international financial centre of London.

 

I think << a new approach to financial regulation the blueprint for reform>> is the most important measures of government, which reform the system of financial regulation. In this book, the quasi ‘Twin Peak’ will replace the current tripartite supervision system. Specifically, Bank of England set up a new Financial Policy Committee (FPC), which is a macroprudential regulation organization. It’s responsible for monitoring and dealing with systemic risk. Bank of England also establishes Prudential Regulation Authority and Financial Conduct Authority. PRA will take prudential supervision for all kinds of financial institutes. FCA will supervise the business activities of financial institutes, which can promote financial market competition, and protect consumers. In fact, FSA will transfer its prudential supervision function and behavior regulatory function to PRA and FCA. At the same time, PRA and FCA will be guidance by FPC in terms of   macroprudential supervision.

UK try to set up new financial regulatory framework by financial regulatory reform, the effectiveness of the reform remains to be seen, but some approaches are very good, such as strengthen the regulation of systemic risk, pay attention to financial consumer and establish special handling mechanism for problem financial institutions.