Characteristics of an accomplished regulator

Lord Eatwell Chairman suggested in his speech

1. That no effective regulator will ever be popular.
2. By definition, regulation involves stopping people doing things that they want to do, and requiring them to do things that they don’t want to do

and

1. An accomplished regulator can be respected and recognised as a force for the general good, and that is what I intend JFSC will be under my Chairmanship.

He also wanted to dispose of a couple of hoary old complaints about regulators.

1. First, how many times have you heard the complaint that “the regulator doesn’t understand my business as well as I do”?
1. Ridiculous.
1. If the regulator, an outsider spending a relatively short time examining your firm, did understand the business as well as you do, you shouldn’t be in business.
2. You inevitably know your firm best.
3. It’s your job to provide a transparent account of your activities to the regulator to ensure that he or she can do the supervisory job well.
2. Second, how many times have you heard it said that you shouldn’t adopt that transparent approach because it will only lead to the regulator picking on you in the future?
1. Ridiculous and childish
1. Nothing warms a regulator’s heart more than a business that wants to work with the regulator to achieve the goal we are all pursuing, that Jersey should be known as the very best place to build well-regulated financial business.

He went on to say

I believe that the challenges we face will require that the Commission, if it is to be an accomplished regulator, must be a thinking regulator, an agile regulator, and therefore an inquisitive regulator

A thinking regulator is a regulator that actively confronts the prospective challenges posed by change.

The Commission has, in the past, been rather overly devoted to examining the success or otherwise of its past operations.

This is, of course, necessary, since lessons are learned from the past. But too much time spent examining the past and too little devoted to future challenges and to speculative argument, does not make for a Commission that can provide the adaptive environment in which Industry can make the most of the opportunities that changing financial circumstances present.

It is this “thinking” approach that is necessary if the regulator is to be agile.

It is inevitable in an innovative industry such as financial services that even a successful regulator is 10 metres behind the market in a 100 metre race. The point is not to fall even further behind.

The goal should be to understand the significance of new developments, and decide on an appropriate, well-founded response within a reasonable period of time.

It is not the task of the regulator to be a financial entrepreneur, or to attempt to guide innovation – though the regulator may have an important part to play in thinking through policies that aid market development.

It is one of the key tasks of the JFSC to provide a regulatory environment that is conducive to those innovations that serve the best economic interests of the Island – put simply, growth and jobs.

To be thinking and agile the JFSC must be an inquisitive, outward-looking regulator serving an outward-looking Industry – and therein lays a dilemma.

The Commission simply does not have the resource, and given the size of the jurisdiction, cannot have the resource, that enables it to pursue a significant research agenda within the Commission itself.

So what is absolutely necessary is that the senior executive team identify and engage with creative thinkers throughout the international regulatory community, leverage the work of others, and focus it through the lens of the needs of Jersey.

The Board has its role to play too. The Board must be composed of individuals who bring a wide range of experience and analytical skills to the Commission, and they must be prepared to be agile, to learn.

The full speech can be read here: http://bit.ly/1r0kOS2