On the 18th March 2009, the Financial Services Authority published the findings of the review of UK International Banking Regulation carried out by Lord Turner, Chairman of the FSA. This was produced in response to a request from the Chancellor of the Exchequer on the 6th October 2008 who asked Lord Turner to consider the causes of the financial crisis and to make recommendations for reform to regulation and steps to achieve the financial stability of the UK banking system. The key recommendations are as follows:
- significant changes in the regulatory approach to liquidity, capital adequacy and accounting; changes to regulation of credit rating agencies so as to limit conflicts of interest and the inappropriate application of rating techniques;
- changes to the supervisory approach of the FSA so as to make it more focused on business strategies and system wide-risks, rather than internal processes and structures;
- major reforms in the regulation of the European banking markets, including a new European Regulatory Authority and increased national powers so as to prevent cross-border activity which is regarded as high risk;
- changes in the corporate governance arrangements in the banks, and in particular in relation to remuneration policies. The FSA has also published a discussion paper called: "A Regulatory Response to the Global Banking Crisis" which underpins the Turner review in that it covers the issues set out in the Turner report in more detail. Feedback is invited on this up to the 18th June 2009.