Was self regulation behind the weakening UK economy?
As the UK government and regulators look to the future, more and more people are looking back over the last 10 years trying to identify how the UK economy was so exposed to the worldwide economic downturn. Despite assurances by the government and the regulators that everything possible was done to avoid such a situation, the subject of self-regulation has risen its head on a number of occasions.
In essence, self-regulation was the regulatory framework (very loose framework) which allowed informal regulations to be adopted by various financial industries without any legal recourse. Not only did this speed up the regulatory environment and the rate at which new guidelines could be introduced, but also gave the industry carte blanche to "look after itself".
While the UK government is now attacking the banking sector with accusations of risky business models, weak compliance guidelines and excessive spending on salaries and bonuses, this is a government which has collected hundreds of millions of pounds in tax from both companies and employees in the sector. It is difficult to see how the government can argue so strongly that the banking sector has let down the UK economy when the financial services authority has always been in charge of regulation and had the ability to diminish the power of "self-regulation".
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