The role of third parties in banking regulation and supervision

Singh, Dalvinder
March 2003
Journal of International Banking Regulation;Mar2003, Vol. 4 Issue 3, p275
Academic Journal
A trend has emerged towards a 'single financial regulator' to enhance the efficiency with which financial conglomerates are regulated and supervised. The UK is no exception: it has established the Financial Services Authority (FSA) md introduced the Financial Services and Markets Act 2000 (FSMA 2000). The introduction of a single regulator does not necessarily mean that gaps in a financial regulation and supervision are filled! This paper will focus on one aspect of a single regulator: the role of third parties (accountants) in the governance of 'regulated firms'. The paper will outline the role of both the external auditors and reporting accountants in the UK, which are governed by FSMA 2000. The dual role of 'accountants' can give rise to conflicts of interest and these can undermine their contribution to regulatory decision making. For example, their interests seek to protect commercial profits, safeguard shareholder interests, and protect investors and depositors. It will be shown that commercial interests inevitably override those interests of a public nature.


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