Regulating in Recovery
FCA Chairman, John Griffith-Jones, examines the critical importance of effective conduct financial regulation as we enter a post-crisis period of economic recovery.
The Chairman of the Financial Conduct Authority has told an audience at Cass Business School that in spite of improving conditions, the financial industry cannot be lulled into believing that the problems which led to the crisis have been definitively resolved.
John Griffith-Jones made the comments while delivering a talk in association with The Mergers and Acquisitions Research Centre (MARC) at Cass.
"Lessons learned from downturns, especially where people lose money, have the habit of being forgotten in the subsequent upturn" he said. "Nothing creates memories better than disaster, and nothing blurs them better than success".
Mr Griffith-Jones became Chairman of the new Financial Conduct Authority in April 2013 charged with determining the direction of conduct regulation, in the context of developing a safe and successful financial services sector in the future.
"At the FCA we have been set one overriding objective of ensuring markets work well, supported by just three operational objectives concerning customer protection, competition and integrity. As a package they are refreshingly easy to understand. But make no mistake, making markets work well is a much greater challenge than preventing them from working badly, which can readily be achieved by preventing them from working at all".
Mr Griffith-Jones explained how the increasing need for consumer protection has demonstrated the continuing need for an effective conduct regulator. However, he was also emphatic in his belief that those within the financial industry must play a significant role in re-establishing equilibrium to the new norms.
"Regulators have a big job ahead of us, but modest as compared to the changes required of some of the firms we regulate. Their future behaviour will shape the future of regulation, and over time they will get, from Parliament, the regime they merit".
In closing, he told the audience: "The FCA is a child of crisis. We know how to make the new regime work well from a conduct perspective. But we are the means to the end, not the end in itself. It is for industry to demonstrate that it can this time meet our objective, of making markets work well, under their own steam".
John Griffith-Jones' full speech, 'Regulating in Recovery' is available to read on the FCA website.