Regulations will not prevent crash, executives warn

Warning signSenior financial services executives say that regulations, which have been introduced in huge quantities in response to the financial crisis, may not be promoting stability.

According to research, 193 C-suite and senior level staff said that regulations may even be making financial services less stable.

Duff & Phelps, a corporate finance adviser that carried out the research, found that only 6% of the 193 people surveyed said regulatory changes in recent years had created adequate safeguards to prevent a future crash.

Just under 40% said regulation had not created safeguards and 54% said that new rules offer only partial protection against another crisis.

Julian Korek, global head of compliance and regulatory consulting at Duff & Phelps, said regulators are likely to be worried by the weight of industry opinion questioning the efficacy of regulation.

“The findings may simply reflect the limitations of what regulation can achieve. There are, after all, few guarantees with financial markets. However, the depth and breadth of regulation continues to expand, with new requirements on firms and new areas brought within regulators’ remits.” 

A particular concern is the perceived lack of coordination globally between regulators, with only 16% of respondents agreeing that the industry is effectively getting to a single global set of regulatory standards. However, 42% said this is improving.

Asked if regulation had improved investor and consumer confidence in the industry, fewer than a third of respondents - 31% - answered positively. Nearly 60% said it has had little or no effect, with a significant minority of 8% believing confidence had been harmed.

The research is published in Duff & Phelps’ "2016 Global Regulatory Outlook".

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