FSA Chief Expresses Concerns Over European Financial Services Reforms

by Robin Pilgrim, LawAndTax-News.com, London

12 March 2003

Speaking at a recent conference, chairman of the UK's Financial Services Authority (FSA), Sir Howard Davies expressed concern at the pace and focus of European financial services reform.

According to a report from the Legal Media Group news service, during a discussion about the effect of the Financial Services Action Plan on the UK's finance industry, Sir Howard praised the work of the Committee of European Securities Regulators (CESR), but warned that reform directives are in danger of becoming bogged down, and of being too ambitious and expensive for the finance industry to implement effectively.

'The process is more expensive than it needs to be, partly because member states and the Commission have been too ambitious in the degree of harmonization they have sought to achieve,' the head of the UK regulator explained, continuing:

'The effort to harmonize the details, whether in prospectuses, disclosure requirements, or customer suitability rules, is expensive and delivers diminishing returns.'

The LMG report on the conference also revealed that the UK's finance industry is concerned that regulatory reforms may impact on the country's competitiveness:

'I hear a general worry that we might be required in the UK to import models of regulation that are inconsistent with our traditional approach, incompatible with the needs of wholesale markets, unecessarily detailed and in some cases protectionist in motivation,' Sir Howard told those attending the conference.

However, the FSA chairman went on to announce his support for the reforms, and to observe that the system for creating new legislation is working well, meaning that there is no need for a single European regulator.

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