Deputy Editor's Blog: We don't need no regulation
For years businesses enjoyed the fruits of operating in largely deregulated markets. The financial crisis put paid to that, prompting a fundamental rethink of the rules and regulations used to govern the financial services industry.
At last week’s G-20 Summit in Seoul, there was much back slapping among politicians about the work completed on regulatory reform, with calls for greater global coordination in the future.
However, not everyone seems so happy about the brave new regulatory world that they now find themselves in.
Scanning an Ernst & Young survey of more than 500 senior executives in the financial services industry across Europe and the US, it appears that there is a distinct lack of confidence in the emerging regulatory landscape, and significant concerns surrounding the additional cost burden that companies are facing.
In the UK and US – two countries most severely affected by the crisis – only one in four, and one in five, respectively, thinks that the current approach to regulation is likely to reduce the risk of another crisis.
The gripe may be in part due to the fact that the regulation will hit them where it hurts – their profits.
Among survey respondents, 53 percent agree that in the long run profits will be significantly lower as a result of increased regulation, while 62 percent have increased their expenditure on compliance, and 59 percent have increased their spend on risk management.
The cynics among us may argue that if you helped make the mess, there should be a cost attached to cleaning it up.