Srikrishna panel's report moots a unified regulator, but falls short on banks, says ... - Economic Times

Last week, the Financial Sector Legislative Reforms Commission (FSLRC) came out with its report. Back in March 2011, this commission had been tasked with examining the regulatory structure and the laws governing the financial sector. The 10-member committee had a broad mandate covering all financial services as well as everything currently overseen by any financial regulator. The commission's final recommendations have hewed closely to the approach paper that it had published in 2012. Broadly, the commission has recommended what can be called a changeover from an areabased division of regulators to a task-based division. Today, each agency like the Sebi or the Irda or the FMC looks after one type of financial service or one area. In the FSLRC's recommendations, this would be replaced by a horizontal structure whereby the basic regulatory and monitoring functions of all areas would be done by a Unified Financial Agency (UFA). All consumer complaints, regardless of the area will be handled by a Financial Redressal Agency (FRA). There will be a single tribunal, the Financial Sector Appellate Tribunal (FSAT) which will hear appeals regarding the entire sector. There are also three other agencies in the recommendations, along with the Reserve Bank of India which will continue to oversee banking. This new horizontal structure serves the interests of the consumers of financial services (be they individuals or businesses) much better. For one, it should eliminate regulatory arbitrage. The Irda-vs-Sebi spat on Ulips happened because the two agencies' views on the characteristics of investment products were very different. Another advantage of the horizontal structure would be that consumer complaints about a sector would get separated from the regulator. This is important because a certain class of consumer complaints have mistakes or oversights by the regulator at their root. Recognising this root cause means admitting to its own flaw, something that is hard for any organisation. Of course, just merging existing setups under a single banner may not actually eliminate the regulatory arbitrage, as would be obvious to anyone who is familiar with the gap between theory and practice of government functioning. Sebi, Irda, FMC and PFRDA etc could easily continue operating as isolated departments of a nominally unified financial regulator. Download ET's mobile applications for iPad, iPhone, Android, BlackBerry, Nokia and Windows Phone to track news as it happens, live stock quotes, monitor portfolio, get market stats like gainers, losers and movers & much more. To check out free Economic Times apps , Click here The commission's final recommendations have hewed closely to the approach paper that it had published in 2012, says Dhirendra Kumar, Value Research. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGpC-goxTMTIRIreX8RSudWoy8eXA&url=http://economictimes.indiatimes.com/opinion/guest-writer/srikrishna-panels-report-moots-a-unified-regulator-but-falls-short-on-banks-says-dhirendra-kumar-value-research/articleshow/19315668.cms

Put the internet to work for you. via Personal Recipe 2910127