Turner: We over-did 'light touch' regulation
FSA chairman Adair Turner says the regulator “over-did” light touch regulation leading into the financial crisis of 2008, with the backing of several politicians.
In an interview with Bloomberg TV, Turner says: “The fact is we over-did ‘light touch’. It wasn’t a phrase that the FSA said, but it was an idea that I think we applied and it was what several politicians said we should be applying and I think we over-did it.
“I think we thought that ‘light touch’ would be great for the UK economy and it felt that it was up until 2008 and the reputational hits that resulted in part from that, and the crisis that resulted to a large extent from that - from a light touch here and in the US - that has hurt the economy far more than the growth of the City could ever benefit it.
“So we have to get this right in the future and getting it right has to mean understanding that the City is a very important part of the UK economy and wholesale financial services are very important.”
Turner says there were several areas that did not go wrong as a result of the crisis, highlighting asset management as one area that continues to work well,
He adds: “It’s very important to realise that there are lots of bits of the City that didn’t contribute to this crisis and are still providing good services to the world.
“What we’ve got to do is deal with the problems that have emerged, have a more stable system, have a system which, in crucial areas where they were lacking there are better values, and if we get that, I think we will still have a large and important wholesale financial centre in the City of London but one that is more sustainable.”
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