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Banks Financial Crisis

The UK banks are regulated by Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA). These two regulatory bodies were established to bring about structural and cultural changes into the banking system. The current banking laws in UK require banks to taxpayers in case of risks. In addition to that, prudential authority has a mandate to monitor retail and investment activities of banks and ensure a clear cut line between the two. The law also requires banks to behave ethically and puts in place measures to punish rogue banks for actions that may lead to bank failure. Moreover, the laws also ensure that depositors’ money is protected[1].

Baking regulations is very important. Regulations protect the public against instability in the financial sector. In addition to that, regulations also ensures that there are standards to be followed and sanctions those who faults the set guidelines. FCA protects the UK financial market against consequences of unfair market completion and monopolistic power that may exploit the citizens[2]. If banks are not well regulated, there may raise case of money laundry which would greatly affect the economy. Moreover, some banks may mismanage their operations leading to insolvency of financial institutions, if no clear regulation framework, then depositors is likely to lose their money, hence the need for a clear regulations3.

The current regulation of banks in UK is efficient. Establishment of three bodies that regulates advice and implements policies makes it sufficient. These rafts of changes

[1] WANDHÖFER, R. (2014). Transaction banking and the impact of regulatory change: Basel III and other challenges for the global economy. http://www.palgraveconnect.com/doifinder/10.1057/9781137351777.

[2] KEPPLINGER, G. L. (2009). Inspectors General independent oversight of financial regulatory agencies : testimony before the Subcommittee on Government Management, Organization, and Procurement, House Committee on Oversight and Government Reform. [Washington, D.C.], U.S. Govt. Accountability Office. http://purl.access.gpo.gov/GPO/LPS113145.

3 DOW, S. C. (1995). Why the banking system should be regulated. Stirling, University of Stirling, Dept. of Economics.

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