UK: financial services regulation - future direction outlined by FSA chairman

Yesterday the Financial Services Authority chairman, Sir Callum McCarthy, delivered a speech titled "Financial Services Regulation in the UK". Sir Callum provided a strong defence of the regulatory structure governing financial services in the UK and observed:

The principles which have underpinned the regulatory framework in the UK for the last decade remain good principles, which we would depart from at our peril and to our cost"

He nevertheless identified areas in which the FSA needs to improve, including the better application of the principles in practice and greater attention being given to firms' incentive structures (although Sir Callum explained that the FSA has "no part to play in assessing or influencing individual bonuses or individual remuneration"). Sir Callum also made clear that the FSA would press ahead with changes to the UK liquidity regime and noted that "unless there is a step change in the speed with which the Basel Committee progresses international agreement, regulators will be forced to deal with this on a national level".