Financial Regulation Has Become Too Draconian in UK

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

Background of the Study1

Problem Statement3

Purpose of the Study4

Research Question4

Objectives of the Study5

Rationale of the Study6

Significance of the Study7

CHAPTER 2: LITERATURE REVIEW9

Analytical Framework9

Formulating a Financial Policy10

Financial Regulations in Britain13

Codes of Financial Regulation and Corporate Governance15

Corporate Governance in Britain17

CHAPTER 3: METHODOLOGY20

Research Approach20

Research Design20

Data Collection22

Analysing Data22

Projected Time Scale23

Solvency, Basel Accords, and Capital Adequacy Requirements23

Critical Analysis of Financial Regulations in UK25

REFERENCES28

CHAPTER 1: INTRODUCTION

Background of the Study

The lack of literature and critical studies for financial reforms and the vital role of lawyers and legal experts on how to structure, or what to consider when setting up, a unified financial services regulator has influenced the overall financial regulatory regimes.

Even a cursory familiarity with the history of the twentieth century reveals how important health and development of the financial system is to the welfare of average people and to the fate of nations. The financial crises of the 1930 was primarily caused by a financial crisis originating in the United States and brought immense suffering to millions of people around the world (Yergin, 2002, 47).

The transmission of the financial crisis to Europe, beginning with the collapse of Austria's s Kreditanstalt in May 1931 and rapidly spreading to other countries with the wider economy, took a sledgehammer to an already strained political order in Europe, contributing to the rise of the Nazi regime in Germany which was to plunge much of the world into the terrible suffering of the Second World War. After decades of deliberately limiting cross-border capital flows and restricting financial markets, starting in the late 1970s countries around the world began a wave of capital market liberalisation and financial deregulation in the 1980s and 1990s (Wood, 2003, 21).

These changes were accompanied by increasingly frequent financial crises in many developing nations throughout Latin America and Asia in the 1980s and 1990s, resulting in national defaults, widespread economic pain and severe disruptions to economic growth that rocked governments throughout these regions (Jackman, 2004, 106). Most recently, the financial crisis of 2008-2009 threatened the possibility of a second Great Depression, forcing the British governments to engage in costly rescues of their banking and financial systems to prevent broader collapse (Hudson, 2009, 50).

The financial experts had started making a rigorous analysis of the regulative role of the government to safeguard the shareholders interests in the companies. The tool of financial regulation is believed to be essential to maintain a high level of confidence in the investor to ensure good company performance in order to compensate for a problem like misconduct by the company management. The initial step of the UK government in this regard was the Cadbury Report, which was presented in 1992 (Gourevitch, 2005, 69).

After the Cadbury report, the UK government came up with Greenbury Report in the year 1995), the Hampel Report in the year 1998), and finally the Combined Code in the year 2003. Experts have defined the concept of financial regulation, as a settled domain of policy which involves shareholders of the organisation, corporate boards, ...