In its policy paper The Future of Financial Regulation - an Update, ACCA calls for better ethics training for all directors, the implementation of a US-style Consumer Financial Protection Agency in Europe and for company boards to urgently upgrade their risk functions.
Regulators and businesses need to be able to engage in a common sense business dialogue to ensure that global financial regulation heads in the right direction in 2010, says ACCA (the Association of Chartered Certified Accountants).
In its new policy paper entitled The Future of Financial Regulation - an Update, ACCA calls for changes, including better ethics training for all directors (especially non-executive directors), the implementation of a US-style Consumer Financial Protection Agency in Europe and the need for company boards to urgently upgrade their risk functions.
The paper argues that much remains to be done to ensure non-executive directors exercise meaningful and effective oversight of actions of executives in large complex banks. They particularly need help in obtaining assurance that agreed board policies have actually been implemented by management.
The discussion paper also discusses the principles needed for solid financial regulation in the future. It examines:
- the purpose and structure of regulation
- competition
- standards of conduct and competence
- governance
- accountability and incentives
- risk management and capital funding.
'It is still too early to give a definitive view of the regulatory landscape as proposals are still being consulted on at national and global levels,' said John Davies, ACCA's head of business law and co-author of the report. 'The debate will go on way into 2010. But some of the key points made by ACCA have been followed, notably on the welcome maintenance of national supervision as the bedrock of regulation.
'Speculation during the past year about the introduction of some sort of "super-regulator" has remained, mercifully, just that. The connection between regulator and regulated must be maintained, which is why we also have concerns about the proposed pan-EU regulatory architecture - co-ordination and best practice sharing is good, but remoteness is not.'
© ACCA - Association of Chartered Certified Accountants
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