Intensive supervision and the death of “open kimono”

Philip Parish (+44 20 7296 2000, philip.parish@lovells.com) is a partner of Lovells LLP. He acts for banks and financial institutions in litigation and regulatory matters.

It was said that in times gone by, the City was ruled by the twitch of the eyebrow of the Governor of the Bank of England, writes Philip Parish of Lovells. What is certainly true is that the regulatory culture in the UK has historically been one of open dialogue and cooperation. When, as inevitably happens from time to time, things went wrong, the relationship was one of open disclosure and forward looking supervisory action, combined with an informal requirement from the regulator that any remedial action for the past be put in place, whether for customers or for systems and controls. Regulation was not enforcement-led, but, instead, a supervisory dialogue. Any disciplinary action, if necessary, was intended to be relatively discrete, and designed primarily to mark the displeasure of the regulator rather than to damage the recipient.