When turkeys start voting for Christmas, something is amiss. That is something the new Government should (but won’t) reflect on as it this week issues further detail on its controversial shake-up of City regulation. Because, as made clear in our recent focus on financial regulation, even legal specialists in the field – who stand to benefit financially from the sustained upheaval – don’t believe in the Government’s attempt to redraw the tripartite regulatory architecture.
If anything, this week’s consultation document makes the Government’s case that the poor response to the banking crisis was directly due to the regulatory framework look even less convincing. As Sullivan & Cromwell’s Rodgin Cohen observed: “Substantive regulation is far more important than the frameworks which enforce it. If you look around the world, there is no correlation between regulatory structure and where the crisis struck most severely.”
