Hadjiemmanuil, Christos; (1996) Banking regulation and the Bank of England: Discretion and remedies. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis examines the development and present state of U.K. banking regulation. Banks were formally unregulated in the U.K. up through the 1970s, and de facto control over them was ensured by the Bank of England ("the Bank") through informal mechanisms of so-called "moral suasion". In contrast, since 1979 banking regulation is conducted on a statutory basis, regulatory processes have been formalised, and banking institutions are required to conform with a growing body of substantive prudential standards in order to remain authorised to conduct deposit-taking business. Various factors, including market developments necessitating increasing refinement of the statutory framework, the rapid growth of E.C. banking legislation, and the maturation of English administrative law, are found to contribute to the increasing formalisation of banking regulation, whose legal structuring is also assisted by the elaboration by the Bank and promulgation in quasi-formal guidance notices of detailed prudential policies, especially regarding financial requirements for banking institutions. Although the responsiveness of the regulatory régime to the requirements of legal formality and transparency has increased considerably, the transformation is by no means complete. In a number of key areas of prudential policy, the Bank retains a very wide measure of discretion. The strategic character of these clusters of retained discretion enables the Bank to exercise a substantial degree of influence over the conduct of deposit-taking institutions. Moreover, despite the formal availability of opportunities for appeal or judicial review, the absence of specific substantive legal criteria - upon which the courts, or the special Banking Appeal Tribunal of the Banking Act, could rely for assessing, and ultimately overturning, the Bank's regulatory decisions - sets strict limits to the practical ability of potential complainants to obtain a remedy. Similarly, the non-transparency and secrecy surrounding the Bank's individual regulatory assessments and decisions hinder public accountability and control over the operation of regulatory policy. Further formalisation of the regulatory process through the crystallisation of regulatory policies into fully operative legal rules appears necessary. Since a consistent and complete framework of rules in the area is unlikely to occur through primary legislation, the promulgation by the Bank of precise rules in its administrative pronouncements should be encouraged and such rules should find clear legal recognition.

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