The FCA, the PRA and the Idea of Resilience as a Narrative for Policy Coherence

The cohesive implementation of the PRA and the FCA programs to a large extent depends on the ability of the new regulators to attend to matters of their expertise while at the same time being mindful of how the entire system of financial regulation fits and works together. Although one can hope that in due course the PRA and the FCA will be able to overcome points of disagreement, the provision of an umbrella policy objective either as a general statutory objective in the Financial Services Bill 2010-2012 or as a restatement of the PRA and the FCA tasks in their MOU of coordination would speed up this process, given that it would furnish them with an integrative frame of reference to align their policies and work out a common narrative for financial regulation. The idea of resilience could provide a fertile conceptual background for bringing the FCA and the PRA mandates under an umbrella policy objective provided that it can acquire a broader meaning to the one that is currently attached to it in the context of macroprudential regulation. Drawing on a diverse pool of disciplines, I demonstrate that resilience need not be thought of as the capacity of the financial system to absorb shocks ('macro-prudential' sense of resilience) but more generally as adaptive capacity to the transformative consequences of change under circumstances of uncertainty. Understood in this broader sense, resilience underlies a wide range of thematic areas in financial regulation including those of financial stability, (macro and micro) - prudential regulation, consumer protection, conduct of business and market integrity. The definition of resilience that is here proposed will require further refinement and it is offered in the hope to generate wider debate