Lord Turner's Mansion House speech looked back at the crisis, identifying some of the factors that contributed to it. As on previous occasions, he focused on bonuses that rewarded excessive risk-taking and "socially useless" products. But he said the more fundamental problems were prudential rules and a philosophy of market regulation which did not identify and adequately address the dangers of excessive leverage and maturity transformation. He said that change needed to be on three fronts:

  • significant increases in bank capital and liquidity requirements: in this context he welcomed Basel III and said it did all it could, although critics wanted even higher new ratios;
  • clear strategies to ensure that banks will not be bailed out by tax-payers: he said this should extend not just to banks but to any institution deemed "too big to fail"; and
  • macro-prudential tools which can slow down excessive credit growth.

He said the work of the new Financial Policy Committee is crucial as it will fill the previous "underlap" between regulators. He also spoke about the new UK regulatory structure for prudential and conduct of business supervision, highlighting that while the new structure would fill some of the previous gaps between the Bank of England and FSA, it would create new problems in areas where it is not clear whether the new Prudential Regulatory Authority or Consumer Protection and Markets Authority should have responsibility. Andrew Bailey of the Bank of England also spoke on reforming financial stability, the role of the PRA and the importance of dealing properly with struggling institutions.