Examining the Uk's Experience in Adopting the Single Financial Regulator Model

Abstract

In major markets around the world there has been a growing trend towards unification of responsibility for the regulation of banks, securities markets and insurance companies. As the first major international financial centre to adopt the single regulator model, the UK changes have attracted particular international attention. This paper makes no claim for the superiority of the single regulator model but looks at what other countries may learn from the UK's experience in adopting the structure. The extent of fundamental legal change that accompanied the UK's shift to the single regulator model stands out: unlike some other countries, which have a single regulatory agency but separate sectorally-divided legal regimes, the UK has sought to match the unitary nature of its institutional arrangements for financial regulation with an integrated legal framework. This paper sets out the historical background to the switch to the single financial regulator model in the UK and identifies key events in the transitional period between the announcement of the intended switch and the coming into effect of the new unitary regime in December 2001. It then examines some of the theoretical arguments about the suitability, efficiency, effectiveness and accountability of the single regulator model against the background of recent UK experience and considers the likely robustness of its ambitious tailor-made legislative framework that was expressly designed to help secure potential benefits, and avoid potential drawbacks, presented by the single regulator model.

Keywords: Financial, regulation

JEL Classification: K2