The Turner Review, published in March 2009 considered the regulatory changes needed as a response to the global banking crisis. The ACT has submitted its comments on this and the FSA’s accompanying discussion paper DP 09/02, broadly supporting the assessments made by Lord Turner and the measured view of what regulatory reactions could help prevent a repeat crisis.
The ACT response supports the proposals to increase the capital required to back propriety trading by banks, but does not go so far as to call for a complete ban or separation of this activity. However the ACT does consider that there needs to be some control of asset quality and an overall size cap on the size of the trading book.
The view of the ACT is that companies generally do not need very large banks and that their existence can create unwelcome risk to the financial system, nonetheless we do not support the compulsory breaking up of large banks, but rather would support other measures to make large banks a less attractive model economically.
The Turner Review and FSA discussion paper DP09/02 are available at http://www.fsa.gov.uk/pages/Library/Communication/PR/2009/037.shtml
