BSA Annual Lecture

Can principles-based regulation ever be achieved?

This was a question posed by Andrew Hilton from the Centre for the Study of Financial Innovation (CSFI) at the BSA Annual Lecture on 18 October.  In practice, he suggested, there is little difference between principles and rules-based systems.  Speaking frankly, Hilton said “I don’t think we are really going to get genuine principles-based regulation until the last lawyer is strangled with the guts of the last compliance officer.”

“All regulation is bad”

Too much regulation came top of the CSFI’s annual ‘Top 10 Banking Banana Skins’ surveys in 2005 and 2006, and whilst Hilton acknowledged regulation is “frequently inevitable”, he went on to say “in and of itself, it [regulation] is a bad thing – for at least five good reasons that the FSA must recognise…it is not a free good… regulation is a barrier to entry… regulation favours the big over the small… regulation also inhibits innovation… regulation can hurt the consumer.”

The full text of Andrew Hilton’s speech can be viewed on the BSA website here