CSFI Survey Warns On Over-Regulation Of Banks

by Robin Pilgrim, LawAndTax-News.com, London

23 February 2005

According to the 'Banana Skins' survey published on Monday by the UK's Centre For The Study Of Financial Innovation (CSFI), the dramatic increase in regulation and oversight facing banks is seen as the greatest risk affecting the sector.

The poll, conducted by the independent think tank and sponsored by PricewaterhouseCoopers, found that "regulatory overkill saps bank resources, reduces risk diversification and creates a false sense of security".

The findings were based on responses from 440 bankers and close observers of the banking scene in 54 countries, but the CSFI revealed that the threat is perceived to be particularly strong in the EU and North America, where many senior bankers have described regulation as “out of control”.

Speaking with regard to the results of the survey, John Hitchins, UK Banking chief at PricewaterhouseCoopers, observed that:

"Bankers have thrown down a challenge against too much prescriptive regulation. Many are worried that it is beginning to stifle innovation and judgement across the industry. While few challenge the objectives of regulators, there is a clear need for further debate on how these are implemented. "

Other fast-rising risks identified in the 2005 poll included hedge funds (in fifth place), electronic fraud (in sixth), and currency risk (in seventh place) due to the shaky US dollar.

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