Financial services firms and regulators share a common interest in a regulatory environment that effectively supports economic development and growth, financial stability, customer service, and consumer protection. Yet there is increasing concern about the growing complexity and uncertainty of the current regulatory landscape. The IIF welcomes the efforts that many in the public sector have made to recognize and to address the challenges of delivering effective regulation through a variety of initiatives currently being pursued. Nevertheless, the IIF believes that closer interaction between the private and official sectors is needed, and that further such initiatives should be considered in areas where they are not yet a priority.

The Special Committee on Effective Regulation has a membership of very senior financial industry executives from across the Globe, co-chaired by Mr. Peter Sands, Group Chief Executive, Standard Chartered. The Committee has been particularly active over the recent period. In particular it published a new report Restoring Confidence, Creating Resilience: An Industry Perspective on the Future of International Financial Regulation and the Search for Stability on July 23. Previously the Committee was responsible for the development of the Proposal for a Strategic Dialogue on Effective Regulation, published in December 2006.

The Committee will soon be commencing the next phase of its work. These will likely include the issues of how to enhance cross-border coordination and resist fragmentation; the shared responsibility’ of regulation and markets for achieving financial stability; more effective supervision of international banks; cross-border crisis management; the resolution of failing banks; etc. To this end, the IIF has created the Cross-Border Resolution Group and the Cumulative Effects Working Group.

The IIF sees the following concrete benefits to both regulators and industry from this initiative.

• Deepening industry understanding of the fundamental objectives of regulatory bodies, and regulatory understanding of industry structures and approaches.
• Improving the focus on the origination and development of clearly targeted policies, as well as on their implementation.
• Supporting existing public-sector efforts to improve regulation and establish best-practice approaches to meeting regulatory objectives.
• Deepening understanding of the international dimensions of regulatory practices and requirements the better to assess the international implications of regulatory initiatives and enhance international communication and cooperation among regulators.
• Making regulation more effective by identifying and rectifying unduly burdensome or counterproductive practices or approaches.
• Addressing the cycle of complexity, whereby market responses to regulation, and implementation by line supervisors, or the desire within firms for relief from uncertainty may lead to further detailed regulations rather than to a review of the goals of the original regulation.
• Fostering an ongoing, disciplined and objective dialogue about effective regulation that can meaningfully inform legislative and public discussion of regulatory issues.

Read more on the Committee and its working groups