Executives believe that regulation has not secured industry stability

Published on 26th December 2014

 

A survey of nearly 300 professionals found that 48 per cent of C-suite executives believe recent regulation has had little or no impact on financial stability as 11 per cent say it has made the sector less stable.

The survey by Kinetic Partners’ 2015 Global Regulatory Outlook report also found that just 2 per cent of senior executives surveyed believe changes to regulation have fully addressed the risk of another financial crash.

CEO and Founding Partner of Kinetic Partners, Julian Korek, said the findings show that more work needs to be done to build stability in financial services to ensure the system is resilient in the future.

“While attitudes to regulation have softened over the past two years, it appears that confidence is limited among financial services firms that the lessons of the crisis have really been learned,” he said.

“The major regulatory bodies have been very clear about future areas of focus and concern, but the fact that so many still think there is potential for another crash is worrying.”

The report also found, that while a minority supported making senior management criminally responsible for deficiencies in compliance programs, 48 per cent said it would have a longer-term negative impact on the industry while 17 per cent said it would make no difference.

Fewer than one in ten believed that more fines on firms or individuals would strengthen accountability and trust while just one per cent favoured regulation.

Those who took part in the survey, instead, felt that greater transparency in governance and management functions, better use of existing regulations and improvements in public education about the financial world would be the key to insuring stability.

Ann Marie Croswell, Partner within Kinetic Partners’ Regulatory Compliance team in Hong Kong, agreed that regulation alone cannot rebuild trust and ensure stability.

“It could be that politicians and governments have a responsibility to improve levels of financial education in their jurisdictions,” she said.

“But it is clear firms also have an important role here when it comes in winning back public confidence in the sector and ensuring transparency in their operations and governance to maintain it.”

“Firms must continue to assess their governance and management functions, not just for the sake of compliance, but also with consideration to how they look to clients and to the public. Any concerns therein could be perceived as genuine weaknesses and translate to business loss.”

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