Give us a Break – Stop Legislating

Abstract

This paper aims to provide an illustration of how a complex process of excessive legislating has significant impacts on the banking and financial sector. We all know that following the 2008 financial crisis, the banking and financial sector is now among the most heavily regulated industries. The 2008 financial crisis may have been caused by deregulation in the financial industry, but what about now? We have witnessed an onslaught of legislation, as if this could be the answer to catching any flaws in the financial system. With this paper, we seek to provide different perspectives on how excess regulation can have a negative impact on the banking and financial sector’s business, on its ability to rapidly adapt its technologies to new developments and on financial stability as a whole. We also question how small banks, such as national or even international banks, which lack human resources and strive to reduce employee costs, will manage to survive the hurricane of legislation and comply with all its requirements. In view of increasingly demanding regulatory reporting requirements, their alignment with national and local specifications and interpretations must also be considered. National authorities and local governments are always tempted to add a little more “spice”, further complicating the transposition processes and causing the non-uniformization of requirements between countries, what we may call “the big mess”. For international banks with a global presence, this represents a big challenge, particularly when a horizontal transposition of a given requirement is demanded in the countries where they operate. The three “visionaries” whose views are presented here come from three different fields of work, one is a general in-house counsel at an international bank, the other a partner at a law firm and the third a private banker with more than 24 years of experience in the banking industry.