Jacqui Hatfield, Partner and Head of the Financial Services Advisory Group at Reed Smith LLP, comments on Hector Sants' plans for the Prudential Regulation Authority (PRA):
"Sants' announcement of a more intensive approach to regulation is unsurprising - the PRA's principles-based approach was always going to try to make up for the inadequacies of the FSA. However, this approach will contrast starkly with the FCA's rules-based approach and could lead to issues for firms who fall under both remits.
"The reports on failures of banks are a good thing from an educational point of view. Knowing why a bank failed will highlight issues of common concern to banks which could prevent further failures. If the reports show compliance weaknesses, again this can help prevent further issues arising.
"As part of their remit, the PRA will vet key officers of those firms within its remit. There are a number of issues with this. It will be highly embarrassing if they approve someone and subsequently find there are problems with them. The boards of these particular firms should be able to make up their own mind about who has sufficient experience to fulfil the role.
"To ensure that the PRA works to the best of its ability, it requires key talent - and this comes at a price. To attract the best talent, the PRA will need to ensure that its remuneration is competitive and boosts its ability to employ the staff it needs to provide effective Pillar 2 supervision."
Notes to editors
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