Nov 26 The financial services industry should adopt voluntary standards to help restore trust in banks and create a "third way" between self-regulation and over-regulation from authorities, an industry study released on Tuesday suggests.
Regulators across the globe have increased oversight of the sector, and banks' reputations have been battered by a series of scandals, including trying to manipulate key benchmark rates.
From the libor rate rigging scandal that has engulfed UBS , Royal Bank of Scotland, Barclays and Rabobank to JPMorgan's record payment to settle charges it overstated the quality of mortgages it had sold, banks on both side of the Atlantic are facing a trust deficit.
The report, jointly commissioned by the British Standards Institution (BSI), the UK National Standards body, and the Chartered Institute for Securities & Investment, also in the UK, found broad support within the financial services industry for voluntary standards.
The report, titled "Backing Market Forces", says decision-makers in the financial services industry believe that adoption of voluntary standards could help them work with regulators.
According to a survey of 112 people involved in financial services in London, Geneva and "several other locations", more than two-thirds of respondents called for "more standards" for people, products and processes in the financial sector, with 54 percent favouring self-oversight by the industry rather than by regulators.
The study identifies many areas where voluntary standards are currently lacking, such as in anti-money laundering, qualified investor rules, or fiduciary ratings.
The report prepared by research firm Z/Yen Group concludes that a "new combined approach" to regulation in the financial services sector could boost confidence in the financial system and usher in reforms.