PracticeAccounting FirmsRegulation is at crossroads, says Rake

Regulation is at crossroads, says Rake

UK's most senior accountants urge rulemakers to keep a principle-based approach to regulation in the market crisis

Sir Mike Rake, BT chairman

Sir Mike Rake, BT chairman

Two of the UK’s most senior accountants have warned that market turmoil has
left regulation at a crossroads, but have urged rulemakers to learn from their
experiences and not see sweeping, additional regulation as the answer.

Speaking at last week’s Financial Director Summit,
BT chairman Sir Mike Rake said:
‘It’s incredibly important we don’t have a knee-jerk reaction to how we manage
events in the future. We must have a principles-based approach to regulation and
it must be global.’

Sir Mike said it would be important to ask questions about moral hazard, fair
value, risk management and executive remuneration schemes ­ but that the time
for ‘intellectual debate’ would come later.

‘It’s absolutely clear regulation is at a crossroads,’ he told delegates. ‘We
have to cure the disease and subsequently work out what caused it and prevent
it.’

In his first major speech, new
PricewaterhouseCoopers UK
chairman Ian Powell said dealing with systemic risk in unregulated entities had
to be a priority. ‘The real challenge is to improve our regulations and not just
add more,’ he told the firm’s building public trust awards this week.
‘Regulatory change is an opportunity to simplify, streamline and look at the
real costs and benefits.’

Powell urged further change.

‘We need a better mechanism to flag problems,’ he said. ‘I want the leading
accounting firms to be willing to join the top table, with business leaders,
with regulators, central bankers, credit rating agencies and others to identify
ways of creating an early warning system.’

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