A cross-industry taskforce, co-ordinated by
the International Federation of Accountants (IFAC), has called on
the G20 to push for further convergence of regulation and standards
across the world.

In a report, Regulatory Convergence in
Financial Professions and Industries, the Private Sector
Taskforce (PSTF) made several recommendations with the aim of
facilitating economic stability in the world’s capital markets.

The taskforce said the major motivating factor
for enhanced regulatory co-ordination, co-operation and convergence
is “to minimise the effects of systemic risk that result from
inconsistent and inadequate regulatory arrangements for globally
important and increasingly interconnected industries, such as the
financial sector”.

The report stresses the necessity of open
communication and transparent processes, as well as continued
co-operation between national and regional regulators and
professional and industry groups to further develop global
standards.

It warns against the dangers of unilateral
decision making and advocates enhanced consultation and global
co-operation on matters of regulatory reform to avoid regulatory
fragmentation.

IFAC president Göran Tidström said while great
strides have been made in regulatory convergence there is still
more to be done and the global financial crisis highlighted
this.

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“IFAC supports the G20’s work to reform the
international financial system and reduce informational uncertainty
and risk and thus avoid future financial crises. The PSTF report
encourages the G20 to maintain its current momentum towards
international convergence identifies existing gaps and offers
insightful recommendations. There will be no better time to
progress these issues,” Tidström said.

The International Valuation Standards Council
(IVSC) board of trustees chairman Michel Prada said the council
supports the PSTF’s recommendations as there is an urgent need to
find a more efficient approach to the valuation of all types of
assets.

“The IVSC is actively engaged…in delivering a
comprehensive set of international standards in order to restore
confidence in the good functioning of financial markets,” Prada
said.

“We are also convinced of the need for a
stronger architecture of international financial regulation and
enhanced cooperation between regulators and private sector
organisations.”

Recommendation highlights:

  • Momentum – focus on
    regulatory convergence in the financial sector ensuring narrow gaps
    in regulatory convergence are identified. Discourage nations from
    making unilateral decisions and implementing unilateral national
    regulatory reforms that are inconsistent with international
    standards;
  • Consultation – enhance the
    breadth and depth of consultation on matters of regulatory reform,
    especially with groups most impacted by the reforms;
  • Standards and consistency –
    encourage and support the development, adoption, implementation and
    consistent interpretation of international standards for each of
    financial reporting, auditing, valuation and actuarial
    services;
  • Macroprudential oversight –
    enhance macroprudential oversight, which is supervision of the
    entire financial system, measures by enhancing the mandate of the
    Financial Stability Board and encouraging IOSCO towards convergence
    of capital markets regulation and oversight;
  • Strengthening regulatory
    organisations     – support strengthening the resourcing and
    governance arrangements of international regulatory organisations
    including standard setters to enable them to achieve their
    objectives; and,
  • Resolution for bank-related financial
    institutions     – establish a globally coordinated resolution
    regime for bank related financial institutions.

Other taskforce members included the CFA
Institute, INSOL International, the Institute of International
Finance, the International Accounting Standards Board, the
International Actuarial Association, the International Corporate
Governance Network, the International Insurance Society and the
IVSC.