Tag: Financial Conduct Authority

Enforcement and the Greater Good: The View from Financial Services Law & Regulation

Posted on by foluke.adebisi

By James Davey, Professor of Insurance & Commercial Law, University of Bristol Law School

Assume that we can agree what the greater good entails. And that we can design an optimal set of rules or principles that meets this objective. Who should enforce these rules, and how? This is an issue that caught the attention of leading scholars in the second half of the twentieth century. Papers by Becker, Stigler and Posner are emblematic of an initial burst of activity in the 1960s. This has since developed into a distinct branch of regulatory theory. Over time, this broadened beyond the architecture of public law and has become an embedded element within private law. This co-option of private law, and in particular the law of contract, as a form of governance has been decried by some but is now well established as a regulatory technique (Collins, 1999). (more…)

Controlling bank misconduct: how to improve consumer protection?  

Posted on by lee.mcconnell

By Dr Holly Powley, Lecturer in Law and Prof Keith Stanton, Emeritus Professor of Law (University of Bristol Law School).

Background

In April the Financial Conduct Authority issued a Feedback Statement (FS19/2) on its Discussion Paper (DP18 /5) ‘A duty of care and potential alternative approaches’ affecting the financial services industry. The Feedback Statement reports on the outcomes of the consultation and summarises the views of those who responded to the consultation. This is a topic that has been on the regulatory agenda for several years, originally initiated by the Financial Services Consumer Panel (FSCP), but also considered by the Law Commission and the House of Lords Select Committee on Financial Exclusion, with varying degrees of support. The authors have assessed these reform proposals in an earlier blog post. Whilst it is difficult to draw any firm conclusions from this round of discussions as to the FCA’s future policy in this area, it does indicate how the FCA’s work on this topic is developing. (more…)

The Future of Banking Regulation

Posted on by legalresearch

By Dr Holly Powley, Lecturer in Law, and Prof Keith Stanton, Professor of Law (University of Bristol Law School).*

© Crowdfund Insider.

The regulation of banks is a difficult and high profile task.  The banking industry is complex and plays a fundamental role in the UK’s economy.[1] The financial crisis highlighted the importance of the UK having a regulatory regime that can maintain the health and stability of the banking sector. Banks provide payment and funding services that are central to the successful operation of the modern economy. Regulation therefore needs to ensure that the banking sector is healthy. This blog post will briefly outline the main developments in the UK’s regulatory approach in recent years, and will identify the key areas of concern facing the regulators. (more…)

Culture in the banking regulators: the need for challenge

Posted on by legalresearch

By Dr Holly Powley, Lecturer in Law (University of Bristol Law School).

city-of-london-1In the aftermath of the financial crisis, a debate has been raging about the culture of financial services institutions – both in terms of how individuals working with financial institutions conduct themselves, but also on attitudes towards risk-taking within these institutions. Given that banks are now considered to provide consumers with a service that is essential to the operation of the modern economy, this is an important debate.

However, those tasked with regulating and supervising the banking sector haven’t escaped this scrutiny either. If the UK is to avoid a future financial crisis of the magnitude experienced between 2007 and 2009, there also needs to be a culture change within the institutions tasked with overseeing the UK’s financial services sector. The regulatory bodies need to be capable of challenging themselves, their policies, and the institutions they are tasked with supervising: they need to question the status quo. This means a move away from the ‘light touch’ approach that encompassed the Financial Services Authority’s (FSA) regulatory philosophy, avoiding ‘box ticking’ and introducing the exercise of judgement when making decisions about the supervision and regulation of the banking sector. Before the financial crisis, regulators didn’t challenge the conventional wisdom. It was believed that markets were stable, and that institutions were unlikely to fail. There was very little focus on financial stability issues, a point reflected by the fact that (as highlighted in the report on HBOS’s failure) only one of 61 issues discussed by the FSA’s board in the build up to the crisis related to financial stability. The crisis itself highlighted the flaws in that approach. To avoid this in the future, regulators have to ask difficult questions of themselves, and of the regulated sector. (more…)

Tesco Bank and Cybercrime

Posted on by legalresearch

By Mr Andrew Charlesworth, Reader in IT Law, and Prof Keith Stanton, Professor of Law (University of Bristol Law School).

© Tesco Bank
© Tesco Bank

The day has arrived on which a cyber attack has succeeded in breaching a bank’s security with the result that customers’ money has been taken from their accounts. According to press reports the accounts of around 40,000 customers of Tesco Bank have been accessed and the bank has refunded £2.5 million to 9,000 who have had money removed.

Banks’ IT systems are an obvious target for cybercriminals.  The fact that such systems contain both money and data on customers makes them extremely tempting. As banks have developed new channels for delivery of services, such as websites, mobile applications and social media, these have often been added, or linked, to existing out-dated systems. This increased complexity may mean that new avenues of attack are inadvertently created, and make it difficult for a bank to rapidly pinpoint the source of system risks and breaches. The increased use of distributed computing, with multiple systems running across multiple servers, can also create new system risks and simultaneously increase the number of staff requiring access.  While external threats are increasing, it appears that industry insiders remain responsible for a significant share of bank fraud.  How the Tesco cyber attack was carried out remains unclear, but the scale and speed of the transfer of funds suggests a degree of sophistication. (more…)