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This obsession with the financial crisis must end

Monday 16 January 2012 - by Deborah Poole

 Regulators are focusing all their attention on the financial crisis and are pushing through ill-thought-out regulation as a result says Deborah Poole, partner at specialist offshore legal firm Walkers.

If a single word could sum up the state of the financial services industry in 2011, it would be "uncertainty". Very few years in recent memory have raised so many questions about the regulatory, political and economic outlook.

In Europe, the industry has been inundated with new regulation at both domestic and EU levels with the prospect of yet more regulation to come.

Take the alternative investment fund managers directive: three years in the making and yet it is still far from clear what the drivers or benefits are of many of its provisions or even how they will impact funds and asset managers in practice.

One thing is for certain: this slow burning legislative process has contributed to a downturn in the number of hedge funds start-ups whilst industry participants come to grips with the potential impact of AIFMD on their structures and operations.

Solvency II (if adopted) is widely expected to have a negative impact on the value of pension funds and may result in workers ceasing to make adequate financial arrangements for their retirement by, ironically, disincentivising them from paying into traditional pension schemes. The social impact of this is potentially enormous.


The threat of a Europe-wide, financial transaction tax and new EU rules, designed it would appear to ensure that clearing activities be shifted from London to Paris or Frankfurt, are leading many European based trading groups to consider whether the City of London (or indeed Europe) is an appropriate place to do business.

The proposals contained in the Vickers Report, which contemplate the separation of UK banks' retail banking from their wholesale and capital markets business, are likely to focus the attention of bank bosses on restructuring rather than on defending a world class financial and trading model or on building additional business lines to address the shift of economic activity from established to emerging markets.

Not to mention the cost of implementing these proposals, which could see market participants withdrawing from business sectors altogether and hinder investor returns, healthy competition and confidence.


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