Expect a future 'bias to conservatism' - FSA

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Light-touch regulation and a belief in the fundamental rationality of the market will be replaced by a "bias towards conservatism", says Lord Turner, chairman of the FSA.

Financial institutions will face higher capital and liquidity requirements, including counter-cyclical capital during good years to be drawn down in bad, with the FSA "taking away the punch bowl before the party gets out of hand" in future, he said. Turner told delegates at the CBI annual conference: "In setting capital against trading activity we will move from a bias in favour of more trading to a bias to conservatism, whenever we are worried about risk and whenever the real value of the activity is unclear." He said confidence in the financial service industry has been "mugged by t...

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