Banks should adopt voluntary standards to rebuild trust -industry survey

Reuters

Nov 26 (Reuters) - The financial services industry shouldadopt voluntary standards to help restore trust in banks andcreate a "third way" between self-regulation and over-regulationfrom authorities, an industry study released on Tuesdaysuggests.

Regulators across the globe have increased oversight of thesector, and banks' reputations have been battered by a series ofscandals, including trying to manipulate key benchmark rates.

From the libor rate rigging scandal that has engulfed UBS, Royal Bank of Scotland, Barclays andRabobank to JPMorgan's record payment tosettle charges it overstated the quality of mortgages it hadsold, banks on both side of the Atlantic are facing a trustdeficit.

The report, jointly commissioned by the British StandardsInstitution (BSI), the UK National Standards body, and theChartered Institute for Securities & Investment, also in the UK,found broad support within the financial services industry forvoluntary standards.

The report, titled "Backing Market Forces", saysdecision-makers in the financial services industry believe thatadoption of voluntary standards could help them work withregulators.

According to a survey of 112 people involved in financialservices in London, Geneva and "several other locations", morethan two-thirds of respondents called for "more standards" forpeople, products and processes in the financial sector, with 54percent favouring self-oversight by the industry rather than by regulators.

The study identifies many areas where voluntary standardsare currently lacking, such as in anti-money laundering,qualified investor rules, or fiduciary ratings.

The report prepared by research firm Z/Yen Group concludesthat a "new combined approach" to regulation in the financialservices sector could boost confidence in the financial systemand usher in reforms.

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