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City watchdog head calls for 'radical change'
23 Sep 2009The head of the City watchdog called for "radical change" in the financial sector to regain public trust following the devastating impact of the crisis on the wider economy.
Financial Services Authority (FSA) chairman Lord Turner warned against a return to business as usual and the risk of a repeat of the turmoil.
His Mansion House speech last night - a year on from the near-meltdown of the financial system - echoes demands for "moral reform" from City minister Lord Myners last week.
Lord Turner warned British citizens would be burdened for many years with higher taxes or public spending cuts because of a crisis "cooked up in trading rooms where not just a few but many people earned annual bonuses equal to a lifetime's earnings of some of those now suffering the consequences".
He added: "We need radical change...parts of the financial services industries need to reflect deeply on their role in the economy, and to recommit to a focus on their essential social and economic functions, if they are to regain public trust."
The FSA boss said the City would continue to play a "key and vibrant role" in the economy but added that a "bigger financial system is not necessarily a better one".
The regulator is set to lift the capital requirements for banks engaging in riskier activities, as well as demanding bigger buffers against losses from banks and taking a much more intrusive approach.
Although the FSA is aiming to make risk consequences a key consideration in bonuses, Lord Turner said rebuilding trust would not mean an end to well-paid traders "much as some might like it".
But he added: "An industry that recognises the need to moderate excesses, rebuild trust and embrace reforms to prevent another crisis will prosper.
"The real enemies of the City's success and of the market economy, with all its great potential to spread prosperity and opportunity, are not those who raise these issues, but those who want to ignore them."
Reader views (4)
William, London - the bankers were the unsupervised kids playing in the sandbox. Yep, they should be sent to bed without their supper for testing their limits like all kids do. That's how kids learn their lessons.
Who built the sandbox? Who put the sand in it for them to play with? Who walked away, after setting sterling examples on how not to behave, leaving them - encouraged in effect to do as they will - unsupervised, to their own mischievous devices?
As always, it is NOT a one sided story. Unless you wear blinkers, that is.
- Rogan, Irving, 24/09/2009 02:52
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Best place to start would be to get rid of the FSA altogether and start again with "fit and proper" individuals tasked with the authority to take decisive action against any and all firms and/or individuals who break the rules.
Financial products and/or services should be kept "simple" and therefore easy to understand by everyone. In that way, nobody whether consumer, vendor or corporate can claim "ignorance". This should be extremely easy to "police".
Of course, it wouldn't be quite as simple as all that but you do get my drift, right?
- Fraser, Telford Park, 23/09/2009 20:38
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So Jon of London, the bankers who had to be rescued in the City of London, the US, Ireland, Belgium, Holland, Iceland, Germany, and Eastern Europe had absolutely NOTHING to do with the worst financial and economic crisis since the 1930s and in terms of the banks since the early 1900s.
Wow, Jon, should we not be giving Sir Fred Godwin et al medals plus libel damages as we clearly have badly maligned them.
Adam Applegarth for Prime Minister, yo!
- William, London, 23/09/2009 14:35
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Funny, I thought the crisis was perhaps due to the idiot now inhabiting Downing Street spending profligately to buy votes by creating one million useless civil servant jobs, selling the national reserves of gold (after telling the market he was going to) and general lack of oversight by the other group of idiots at the FSA (oh Turner's organisation)who have been unable in their entire existence to oversee anything. They should have nailed Turner to the wall of the Mansion house and pelted him with the beef wellington which they undoubtedly served.
- Jon, london, 23/09/2009 12:57
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