Regulating the banks: 2014 heralds a tough new approach
The start of 2014 has seen the financial regulators begin formal investigations into the troubled Co-operative Bank, following discovery of the £1.5bn deficit in its balance sheets in June 2013 and allegations surrounding its chairman, Paul Flowers. While the Prudential Regulation Authority (PRA) will consider former senior managers’ roles, the Financial Conduct Authority (FCA) will look at decisions and events to June 2013. No further details of the investigations have been released. Alongside three reviews internal to the Co-op, the Treasury will also undertake an independent review via powers under the Financial Services Act 2012 (FSA 2012), examining the actions of relevant authorities, the institution itself, prudential issues, governance and acquisitions. However, this ‘will not start until it is clear that it will not prejudice any actions that the relevant authorities may take, including the potential FCA and PRA enforcement investigations’.
More widely, banking structural reform looks likely to dominate regulation in the financial services sector in 2014. The government’s Financial Services (Banking Reform) Act came into force in December 2013, implementing recommendations from the Independent Commission on Banking and Parliamentary Commission on Banking Standards. Four key areas form the focus of the ‘transformation’ attempts…
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