Action also promised on tax havens. ‘The era of banking secrecy is over,’ says joint statement

Accounting standards, regulation and pay were under the spotlight last week as the G20 summit called for greater global scrutiny of the financial services industry.

In a joint statement issued last Thursday, the world leaders at the summit pledged to repair the financial system and strengthen financial regulation to rebuild trust.

Though details were scanty, the leaders agreed to establish a new Financial Stability Board, with a stronger mandate than its predecessor, the Financial Stability Forum. They said this would help to build a stronger and more globally consistent regulatory framework, and ensure greater co-operation between national regulators.

As expected, the statement also promised action against tax havens. It said: “We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over.”

It called on the international bodies that set accounting standards to improve them. However it stopped short of relaxing fair value accounting standards, as has happened in the USA. Instead, the International Accounting Standards Board has promised to review the system.

The statement also said that credit rating agencies would face regulation.

The ABI welcomed the outcome of the summit. Stephen Haddrill, its director general, said: “The important challenge now is for national governments and regulators to follow fine words with sensible measures which ensure effective regulation and prevent protectionism.

“The EU has a vital role to play here in protecting the single market. With the Financial Stability Board it will need to stick to the principles of modern markets and not try to reinvent older forms of regulation that belong to past eras. The UK – and London in particular – have most to lose if the fine words of today become the shackles of the future.”

Meanwhile, damage to the City of London caused by anti-globalisation protesters was limited, although they broke into a retail branch of RBS.