In a report which identifies three underlying causes of the global crisis - macro-economic imbalances, financial innovation of little social value and important deficiencies in key bank capital and liquidity regulations – Lord Turner, chairman of the FSA, also admitted that the FSA’s regulatory approach of the past decade had failed.
Speaking at the launch of the report, Lord Turner said: 'Until the crisis struck, the FSA's approach was based on an overt philosophy that markets are in general self correcting, that market discipline is effective, and that management and boards are better placed than any regulator to identify business system risks, provided that processes, structures and systems are appropriately designed.”
