Banks will be more credible in their efforts to tame regulation if they ensure that they are backing real, principle-based rules and not reams of paperwork meant to cover every eventuality, Thomas Sutter writes in an exclusive essay for finews.first.


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Several weeks ago, the who's who of Zurich's banking scene gathered at Paradeplatz's trendy «Aura» club to for an annual banker's day. Wherever finance professionals and banquiers gather, gripes about overly-zealous regulation are sure to follow.

While Switzerland has a long tradition – not just in banking – of pragmatic and relatively simple regulation, recent years have seen the complexity of rules in finance rise dramatically. The alpine nation has abandoned its practical approach and often followed a rules-based one that is more common to the U.K.

Instead of the so-called «Swiss Finish» the bankers pled for a «Swiss Way,» or a competition-friendly style of regulation. Joerg Gasser of the Swiss finance ministry made clear in his closing remarks that this demand is addressed not just to regulator Finma and official Bern.

«Sticklers, jobsworths, and pedants take over with countless papers»

Gasser, who is Switzerland's highest tax ambassador, answered the presenter's final question with a telling story about the never-ending legislative project called Fidleg. A working group of industry and officials was tasked with hashing out the directive, which is a MiFID equivalent.

Gasser asked rhetorically who asked for the most specifications and supplements – the finance ministry, Finma or the banks themselves? An arch smile from Gasser said it all: bank lawyers are outdoing themselves with helpful suggestions, which piles layer upon layer of complexity into government directives. The result? Banks complain about ever-increasing regulation and the cycle begins anew.

I can confirm this from my own experience: banks have been talking about principle-based regulation, and self-regulation in particular. But when it comes down to brass tacks, no one talks about principle-based regulation anymore.

Countless papers are hammered out for consultation, and sticklers, jobsworths, and pedants take over. The aim seems to be avoiding any blame later on. The consequence? An Anglo-Saxon rules-based approach dominates.

«CEOs need to take more responsibility and be prepared to make pragmatic decisions»

What to do? Compliance is important and banking lawyers are acting completely rationally: they are paid to minimize any potential risks and to be on the safe side of any potential exposure. The question is simple: who has the final word – the Chief Counsel or the CEO?

The answer is absolutely clear to me: bank lawyers need better controls. Their work has to hold up to the same tough criteria as government regulation does. CEOs need to take more responsibility and be prepared to make pragmatic decisions.

Banks will become much more credible in their legitimate fight against too much regulation if they ensure that their firm and their trade group is backing true principle-based regulation. 


Thomas Sutter is an independent strategy and communications consultant. Until July, he was deputy Chief Executive of the Swiss Bankers Association as well as its communications chief. He joined the lobby in 2015 as head of communications for Switzerland and Germany. Previously, he worked in senior roles at Danzas and Zurich Insurance Group. An economist, Sutter began his career at Swiss Bank Corp – today's UBS – in Basel.


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