HISTORIC PRESS RELEASE : Competition and regulation in Financial Services Markets [November 1999]

The press release issued by HM Treasury on 9 November 1999.

Don Cruickshank today welcomed the Government’s response to his Banking Review Team interim report, ‘Competition and Regulation in Financial Services: Striking the Right Balance’, published on 22 July.

Commenting on Economic Secretary Melanie Johnson’s announcement of the Government response to recommendations in his interim report, he said:

“I welcome the changes the Government proposes to make to the Bill to ensure that markets in financial services are subject to effective competition scrutiny, and that the right balance is struck between the FSA’s regulatory objectives and effective competition.

“I made six, quite detailed, recommendations in my Interim Report. For five of them the Government’s proposed changes to the Bill meet the substance of my recommendations. In its proposals for external scrutiny the Government has gone further, and proposed a reporting procedure which will make the FSA’s assessment of competition transparent.

“My sixth recommendation was that the FSA should be responsible for making the trade off between regulatory and competition outcomes in financial services. I proposed that this should be achieved by giving the FSA a primary competition objective to minimise the anti-competitive effects of its regulatory activity.

“The Government believes that this outcome can be achieved without giving the FSA a primary competition objective in addition to its regulatory objectives. My concern has always been that the outcome should be as Ministers intend. I am not wedded to any particular means of achieving this, and I will welcome any changes to the Bill which deliver the outcome in practice.”

“Work on the review of banking services is continuing and I look forward to reporting to the Chancellor early next year.”