Over 50% Think Global Regulation of FIs Not Practical, Finds Survey

Over 60% believe global regulation of financial institutions is not practical and 52% say tighter regulation will impede a recovery, according to a survey by international legal firm Norton Rose. This is in contrast to the 68% that think better regulation could have prevented the global crisis.

The fourth in the series of surveys tracking market sentiment in relation to the global financial crisis polled 197 respondents from financial institutions and other mainstream corporate entities. The questions examined a theme of ‘financial institutions in the future’.

Other findings of the survey were:

• 68% believe risk management should be given increased resources but only 47% thought firms would actually make the necessary investment.
• 83% agree more focus on remuneration structures is required as part of risk management.
• 75% say state intervention in financial institutions has been effective.
• 84% feel not enough is being done to rid the banking system of toxic assets.
• 66% expect financial institutions to significantly reduce the range of products and services they offer.

James Bateson, head of financial institutions at Norton Rose, said: “We are entering a new phase in relation to the global financial crisis. A more thoughtful approach is emerging as politicians and regulators seek to rebuild the financial system for the future. Whilst it is clear from our results that there is a commonly held view that regulation could have prevented the global financial crisis (66%) there is an interesting paradox in that effective global regulation is viewed as not practical (61%) and a majority of respondents believe tighter regulation could impede a recovery (52%). The issue that must be addressed is whether it was a failure of the regulation itself or the failure to effectively enforce. This is key to understanding how regulation should work in the future and ensuring it does not impede the recovery.”

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