Skip to main content
SpringerLink
Log in

A jurisdictional comparison of the twin peaks model of financial regulation

  • Original Article
  • Published:
Journal of Banking Regulation Aims and scope Submit manuscript

Abstract

The last two decades have seen an increasing number of jurisdictions adopting the ‘twin peaks’ model of financial regulation. Since it was pioneered in Australia, the model has been adopted by the Netherlands, Belgium, New Zealand and the United Kingdom. South Africa is currently in the process of changing its model, and it has also been considered by the US. This paper evaluates the twin peaks model as it has been adopted in these jurisdictions and investigates the extent to which there is uniformity in its design and implementation from a regulatory perspective. The comparative analysis indicates that there are many variations in the design of a twin peaks model and that there is no archetypal twin peaks model. In particular, choices need to be made around key elements in areas such as structural design, operational independence and regulatory coordination.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References and Notes

  1. van Hengel, M., Hilbers, P. and Schoenmaker, D. (2013) Experiences with the Dutch twin peaks model: Lessons for Europe. In: Kellermann, JA, de Haan, J and de Vries F (eds.) Financial Supervision in the 21st Century. Springer, Berlin, p. 188.

    Google Scholar 

  2. European Central Bank (2010) Recent Developments in Supervisory Structures in the EU Member States (2007–2010), p. 5.

  3. See for example, Godwin, A. and Schmulow, A. (2015) The financial sector regulation bill in South Africa: Lessons from Australia. South African Law Journal 132: 756.

  4. See Department of Treasury (2008) Blueprint for a Modernized Financial Regulatory Structure. Washington D.C., pp. 13–14, 142–143.

  5. International Monetary Fund (2012) Australia: Basel Core Principles for Effective Banking Supervision—Detailed Assessment of Observance. IMF Country Report No. 12/313, p. 4. For an analysis of why Australia weathered the Global Financial Crisis relatively well, see Hill, J. (2012) Why did Australia fare so well in the global financial crisis? In: E. Ferran, N. Moloney, J.G. Hill and J.C. Coffee Jr (eds.) The Regulatory Aftermath of the Global Financial Crisis. Cambridge University Press.

  6. For a fuller treatment of these collapses, see Godwin, A. and Ramsay, I. (2015) Twin peaks – the legal and regulatory anatomy of Australia’s system of financial regulation. Journal of Banking and Finance Law and Practice 26: 240.

  7. This paper makes no attempt to look at these models in detail, with the exception of twin peaks. For a more thorough analysis of the various models, see Llewellyn, D. (2006) Institutional Structure of Financial Regulation and Supervision: The Basic Rules. Paper presented at a World Bank seminar Aligning Supervisory Structures with Country Needs, Washington DC, 6 and 7 June 2006; Wymeersch, E. (2007) The structure of financial supervision in Europe: About single financial supervisors, twin peaks and multiple financial supervisors. European Business Organization Review 8(2): 237, p. 262.

  8. See Part 3.

  9. Some commentators refer to the sectoral or operational model as a functional approach, under which each type of business is ‘overseen by a separate, “functional” regulator’: Group of Thirty (6 October 2008) The Structure of Financial Supervision – Approaches and Challenges in a Global Marketplace.

  10. Taylor, M. (1996) Peak Practice: How to Reform the UK’s regulator System. London, Centre for Study of Financial Innovation. In: Llewellyn, D. (2006) Institutional Structure of Financial Regulation and Supervision: The Basic Rules. Paper presented at a World Bank seminar Aligning Supervisory Structures with Country Needs. Washington DC, p. 19. Taylor has been identified as a leading proponent of the twin peaks model following his 1995 paper ‘Twin Peaks: A regulatory structure for the new century’: see Jensen, A. and Kingston, M. (2010) The Australian ‘Twin Peaks’ framework of financial system regulation: Australia and UK compared’. Journal of International Banking and Financial Law 548: 549.

  11. This is considered in detail with respect to the Netherlands, and its decision to move to the twin peaks model. See Part 3.

  12. Joint Committee on the draft Financial Services Bill (JCFSB). Draft Financial Services Bill – Report, together with formal minutes and appendices. HL 2010-12, 236, HC 2010-12, 1447, p. 73 [83].

  13. Financial Stability Board (2013) Peer Review of the United Kingdom. Report, pp. 7–8.

  14. This was considered with respect to Belgium: International Monetary Fund (IMF) (2013) Financial Sector Assessment Program Update – Technical Note – Securities Markets Regulation and Supervision. Report, p. 20.

  15. This was considered in the New Zealand context: The New Zealand Institute of Chartered Accountants, Submission to the Commerce Select Committee, Financial Markets (Regulators and Kiwisaver) Bill, November 2010, para 32.

  16. This was a serious concern in the HIH Report, as discussed in Part 3: see generally Commonwealth, The HIH Royal Commission (2003) The failure of HIH insurance: A corporate collapse and its lessons.

  17. New Zealand Treasury (2010) Financial Sector Regulatory Agencies – Regulatory Impact Statement. Available at http://www.treasury.govt.nz/publications/informationreleases/ris/pdfs/ris-med-fsra-sep10.pdf/view.

  18. For the recommendations of the Wallis Inquiry, see http://fsi.treasury.gov.au/content/downloads/FinalReport/overview.pdf. See also Jensen and Kingston (n 10) p. 549.

  19. Financial System Inquiry (‘Wallis Report’) (1997) Overview – The Financial System: Towards 2010. Commonwealth of Australia, p. 17. According to the Wallis Report, ‘[r]egulation for the integrity of market conduct, consumer protection and the regulation of companies have significant synergies. These functions should therefore be combined’: pp 17–18.

  20. Pan, E. (2011) Structural reform of financial regulation. Transnational Law and Contemporary Problems 19: 796, p. 854.

  21. ibid, p. 854. See also Kremers, J. and Schoenmaker, D. (2010) Twin peaks: Experiences in the Netherlands. LSE Financial Markets Group Paper Series Paper 196, p. 1.

  22. Netherlands Authority for the Financial Markets. (2015) About AFM, http://www.afm.nl/en/over-afm, accessed 18 June 2015.

  23. International Monetary Fund (2011) Kingdom of The Netherlands: Financial System Stability Assessment. Report, p. 22.

  24. Fiennes, T. and O’Connor-Close, C. (2012) The evolution of prudential supervision in New Zealand. Reserve Bank of New Zealand: Bulletin 75:5, p. 5.

  25. Ministry of Economic Development (2010) Financial Sector Regulatory Agencies: Agency Disclosure Statement. Regulatory Impact Statement, p. 4. Available at http://www.med.govt.nz/business/business-law/pdf-docs-library/ris-financial-sector-regulatory-agencies.pdf.

  26. Prudential supervision of ‘specified institutions’ has officially been the responsibility of the Reserve Bank since 1986, after s 38I was inserted into the Act by an amendment. This was later replaced by the Reserve Bank of New Zealand Act 1989 (RBNZ Act) s 67 that provided ‘The Bank shall… undertake prudential supervision of registered banks.’

  27. Cabinet, Office of the Minister of Commerce (2010) Creating a Financial Markets Authority and Enhancing Kiwisaver Governance and Reporting, para 28. See also Commerce Committee, House of Representatives (2011) Inquiry into finance company failures, p. 11: ‘[T]he supervisory framework was fragmented and insufficiently rigorous… The several regulators operated under relatively narrow legislative mandates. Overlapping responsibilities and inadequate funding led to things slipping through the cracks…One of the difficulties with this regulatory framework was that it lacked a clear structure, and the various Acts, amended numerous times over the years, could be confusing.’

  28. See for example, State Services Commission. (2015) Board Appointment and Induction Guidelines – Chapter 5: Removal from Office, http://www.ssc.govt.nz/node/9108, accessed 5 June 2015.

  29. Parliamentary Joint Committee on Corporations and Financial Services (2014) Oversight of the Australian Securities and Investment Commission and The Takeovers Panel. Opening statement from Sean Hughes, 5 September 2014, p. ii.

  30. Bank of England (2011) Joint Committee on the draft Financial Services Bill – Evidence. Evidence presented to Joint Committee, Published 16 December 2011, p. 198. Available at http://www.parliament.uk/business/committees/committees-a-z/joint-select/draft-financial-services-bill/publications/.

  31. KPMG (2012) Twin-peaks regulation: key changes and challenges. Report, p. 3.

  32. Emma Murphy and Stephen Senior (2013) Changes to the Bank of England. Bank of England Quarterly Bulletin Q1, p. 20.

    Google Scholar 

  33. Richter, W. (2012) The Dexia Bailout is Turning into a €162 Billion Nightmare for Belgian Taxpayers. Business Insider Australia, 25 February 2012, http://www.businessinsider.com.au/belgians-get-cold-feet-as-bailout-queen-dexia-drags-them-toward-abyss-2012-2.

  34. See generally Kelion, L. (2011) How Dexia was caught out by the Eurozone debt crisis. BBC News, 6 October 2011, http://www.bbc.com/news/business-15180153.

  35. Tait, N. and Steen, M. (2008) Financial crisis fells Belgian leadership. Financial Times online, 23 December 2008, http://www.ft.com/intl/cms/s/0/189bfaa2-d03b-11dd-ae00-000077b07658.html#axzz3fqSPmokz. The Belgian banking sector has significant international exposure – ‘around 50 per cent of total bank assets are held by subsidiaries or branches of foreign owned banks.’ In 2008, the banking sector was also very concentrated, with ‘the four largest banking groups account[ing] for approximately 80 per cent of all deposits, assets and loans in Belgium’: High Level Committee on a New Financial Architecture (2009) Final Report, p. 39.

  36. The various laws concerning the NBB have been brought together in one document, ‘Statutes of the NBB.’ There is an unofficial translation available on the NBB website: https://www.nbb.be/doc/ts/enterprise/juridisch/e/statutes_e.pdf.

  37. Linklaters (2013) ‘Twin Peaks II – Belgium’. Report, p. 1. Available at www.linklaters.com/pdfs/mkt/brussels/The_Twin_Peaks_II_Law.pdf.

  38. Unofficial translation, last amended by Law of 31 July 2013 (Belgian Official Gazette 30 August 2013). Available at www.fsma.be/~/media/Files/fsmafiles/…/wet…/law_02-08-2002.ashx.

  39. The IMF has noted the similarities between the Belgian model and the Dutch model: International Monetary Fund (2011) Institutional Models for Macroprudential Policy. Staff Discussion Note 11/18, p. 12.

  40. This question goes to the issue of operational independence.

  41. APRA Act, s 7.

  42. APRA Act, s 13.

  43. See Recommendation 32. Coordination and cooperation were to be achieved by making provision for ‘full information exchange between the RBA and [APRA]’ and for ‘RBA participation in [APRA] inspection teams’. Further, ‘[a] bilateral operational coordination committee, chaired by an RBA deputy governor, should be established to coordinate information exchange, reporting arrangements on financial system developments, and other ongoing operational cooperation between the RBA and [APRA], including cooperation in establishing clear procedures for the management of regulated entities which experience financial difficulties’: Wallis Report, ‘Overview’ (n 19), p. 11–12.

  44. Dr Edey (Assistant Governor of the Reserve Bank of Australia) (2011) Evidence presented to the Joint Committee on the draft Financial Services Bill. Published 16 December 2011, p. 435.

  45. IMF (2011) Institutional Models for Macroprudential Policy. Staff Discussion Note 11/18, p. 12.

  46. HM Treasury (2011) Financial Regulation: a preliminary consideration of the Government’s proposals. Report, pp. 32–33. Available at http://www.publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/430/43002.htm. It is relevant to note that under s 9H of the Bank of England Act 1998, the Financial Policy Committee (FPC) can give directions to the FCA in respect of macro-prudential measures, even though the FCA is an independent public body.

  47. HM Treasury (2015) Bank of England Bill: technical consultation, p. 3.

  48. NBB (2011) Report 2011 – Corporate Report. Report, p. 18.

  49. Reserve Bank of New Zealand Act 1986, Part Vc ‘Prudential Supervision of Specified Institutions’, s 38I. This was replaced by the Reserve Bank of New Zealand Act 1989.

  50. Ministry of Economic Development (2010) Financial Sector Regulatory Agencies: Agency Disclosure Statement. Regulatory Impact Statement, 14 September 2010, p. 4. Available at http://www.med.govt.nz/business/business-law/pdf-docs-library/ris-financial-sector-regulatory-agencies.pdf.

  51. Basel Committee on Banking Supervision (2012) Core Principles for Effective Banking Supervision, p. 21.

  52. International Association of Insurance Supervisors (2011) Insurance Core Principles, p. 1. See also IOSCO (2010) Objectives and Principles of Securities Regulation, Principle 1: ‘The responsibilities of the Regulator should be clear and objectively stated.’

  53. See the UK House of Commons Treasury Committee (2012) Financial Conduct Authority, Twenty-sixth Report of Session 2010–2012, 2012, p. 11.

  54. Financial Markets Authority Act 2011 (FMA Act), s 8.

  55. FMA Act, s 9.

  56. ASIC Act, s 1.

  57. Financial Services Act 2012 (FS Act), Part 2 amendments to the FSM Act, s 1B(2).

  58. FS Act, Part 2 amendments to the FSM Act, s 1B(3).

  59. FS Act, Part 2 amendments to the FSM Act, s 3B.

  60. FS Act, Part 2 amendments to the FSM Act.

  61. AFM (2015) Strategic Objectives, http://www.afm.nl/en/over-afm/werkzaamheden/strategische-doelstellingen, accessed 15 June 2015.

  62. Act on Financial Supervision 2006 (AFS Act) [unofficial translation].

  63. Letter from Chairman of the FSMA and Governor of the NBB (2011) Re. new supervisory architecture for the Belgian financial sector, 1 April 2011, p. 1. Available at http://www.iopsweb.org/researchandworkingpapers/47498500.pdf; NBB (2013) Report 2013 – Preamble, Economics and financial developments, Prudential regulation and supervision’. Report, p. 3.

  64. FS Act, Part 2 amendments to the FSM Act, s 1E.

  65. FS Act, Part 2 amendments to the FSM Act, s 1 J.

  66. ASIC Submission to Financial System Inquiry (FSI) (2014) Final Report, p. 18–19. ASIC noted that the Australian Competition and Consumer Commission (ACCC) would remain the competition regulator. The call for a competition mandate was also made in the submission to the FSI by Minter Ellison: Minter Ellison, Submission, Financial System Inquiry, March 2014. The FSI reviewed Australia’s financial system and examined many issues that are relevant to the ways in which the twin peaks model works in Australia.

  67. FSI (2014) Final Report, p. 237.

  68. RBNZ Act, s 67.

  69. RBNZ Act, s 68.

  70. Insurance Prudential Supervision Act 2010, s 3.

  71. Section 3.

  72. NBDT Act, s 7.

  73. NBDT Act, s 56.

  74. APRA Act, s 8.

  75. AFS Act, s 1:24.

  76. FS Act, Part 2 amendments to the FSM Act, s 2B(1).

  77. FS Act, Part 2 amendments to the FSM Act, s 2B(3)(a), (b).

  78. FS Act, Part 2 amendments to the FSM Act, s 2C.

  79. FS Act, Part 2 amendments to the FSM Act, s 2D.

  80. FS Act, Part 2B amendments to the FSM Act, s 9.

  81. Statutes of the NBB (unofficial translation, incorporating amendments by the Council of Regency on 14 January 2015) art 12. This is an unofficial translation available on the NBB website: https://www.nbb.be/doc/ts/enterprise/juridisch/e/statutes_e.pdf.

  82. Statutes of the NBB, arts 14-18.

  83. Statutes of the NBB, arts 23 and 23bis.

  84. FS Act, Part 2 amendments to the FSM Act, s 2B(1).

  85. FS Act, Part 2 amendments to the FSM Act, s 2B(3)(a), (b).

  86. FS Act, Part 2 amendments to the FSM Act, s 2H.

  87. Explanatory Note, FS Act, para 10. The details provision is set out in FS Act, Part 2 amendments to the FSM Act, s 3I.

  88. International Monetary Fund (2011) United Kingdom: IOSCO Objectives and Principles of Securities Regulation: Detailed Assessment of Implementation. Report No 11/232, July 2011, p. 23.

  89. FMA Act, s 20.

  90. ASIC Act, s 14.

  91. FS Act, s 77.

  92. RBNZ Act, s 33.

  93. RBNZ Act, s 14.

  94. APRA Act, s 10.

  95. De Nederlandsche Bank (2015) Independence and secrecy, http://www.dnb.nl/en/about-dnb/organisation/onafhankelijkheid-en-geheimhouding/index.jsp, accessed 15 June 2015.

  96. APRA Act, s 10(1).

  97. Explanatory Memorandum to the Australian Prudential Regulation Authority Bill 1998 (Cth), para 4.10.

  98. FS Act, ss 73 & 74.

  99. RBNZ Act, s 68B.

  100. APRA Act, s 12; ASIC Act, s 12.

  101. AFS Act, s 1:43 [repealed]; International Monetary Fund (2011) Kingdom of The Netherlands – Netherlands: Publication of Financial Sector Assessment Program Documentation – Detailed Assessment of Observance on IOSCO Principles and Objectives of Securities Regulation. Report, p. 28.

  102. AFS Act, s 1:43.

  103. RBNZ Act, s 68B. This directions power has been extended by the NBDT Act, s 9 and the Insurance (Prudential Supervision) Act 2010, s 13.

  104. RBNZ Act, s 68B(5). Where a direction is given under section 68B of the RBNZ Act, this will be reflected in the Statement of Intent (SOI) that the bank must provide each year under section 162A. Section 162B(1)(da) relevantly provides that the SOI must indicate ‘if a direction has been given under section 68B’ and ‘how the bank had regard to the direction.’ No directions appear to have been issued under section 68B of the RBNZ Act to date.

  105. Cabinet Economic Development Committee, Office of the Minister of Finance and Office of the Minister of Commerce (2007) Institutional arrangements for prudential regulation, 13 June 2007, para 18. Available at http://www.med.govt.nz/business/business-law/pdf-docs-library/past-work-and-older-topics-pdfs/review-of-financial-products/arrangements-for-prudential-supervision.pdf.

  106. New Zealand, Parliamentary Debates, 11 December 2007, 644-13830 (Dr Lockwood Smith) ‘Reserve Bank of New Zealand Amendment Bill (No 3) – First Reading’.

  107. New Zealand, Parliamentary Debates, 2 September 2008, 649-18210 (Craig Foss) ‘Reserve Bank of New Zealand Amendment Bill (No 3) – Second Reading Speech’.

  108. APRA Act, s 12.

  109. FS Act, Part 2 amendments to the FSM Act.

  110. FS Act, Part 2 amendments to the FSM Act, s 3H.

  111. See APRA Act, s 12 and ASIC Act, s 12.

  112. For a discussion of the importance of coordination in the context of New Zealand, see The New Zealand Institute of Chartered Accountants, Submission to the Commerce Select Committee, Financial Markets (Regulators and Kiwisaver) Bill, November 2010, paras 63-4: ‘coordination between the regulatory agencies will be essential, given the areas of complementary interest between the agencies…’

  113. International Monetary Fund (2012) Australia: Financial System Stability Assessment. IMF Country Report No. 12/308, November 2012, p. 28.

  114. APRA Act, s 10A.

  115. FSM Act, s 354.

  116. FS Act, Part 2 amendments to the FSM Act, s 3D.

  117. FS Act, Part 2 amendments to the FSM Act, s 3D(1)(b).

  118. FS Act, Part 2 amendments to the FSM Act, s 3D(2)(a), (b).

  119. ibid s 3D(4). The operation of this provision was explained in the Explanatory Note to the Financial Services Act 2012: Explanatory Note, FS Act, para 168.

  120. Memorandum of Understanding between the Financial Conduct Authority and the Bank of England, including the Prudential Regulation Authority (March 2015) para 8.

  121. FS Act, s 64.

  122. AFS Act, s 1:46(1).

  123. Article 45bis.

  124. NBB (2013) Report 2013 – Preamble, Economics and financial developments, Prudential regulation and supervision, pp. 227-8.

  125. Law of 22 February 1998 Establishing the Organic Statute of the NBB (unofficial translation March 2015) art 77bis § 1(1°). Available at https://www.nbb.be/doc/ts/enterprise/juridisch/e/organic_act.pdf.

  126. Linklaters (2011) Twin Peaks – More than a new supervision model. Report, p. 9.

  127. APRA Act, s 56(5); ASIC Act, s 127(2A)(a), (b), (c).

  128. FMA Act, s 30.

  129. For the full circumstances regarding how this is to occur, see FMA Act, s 59.

  130. RBNZ Act, s 105.

  131. The FS Act amendments to the FSM Act replace various sections of the Act, and include a new provision stating that ‘the body corporate previously known as the Financial Services Authority is renamed the Financial Conduct Authority.’ See FS Act, Part 2 amendments to the FSM Act, s 1A.

  132. FSM Act, ss 348 & 349. For a list of the regulations that address the exceptions to confidentiality, see FSM (Disclosure of Confidential Information) Regulations 2001, r 3.

  133. Memorandum of Understanding between the Financial Conduct Authority and the Bank of England, including the Prudential Regulation Authority (March 2015) para 35.

  134. Dutch National Bank (2010) Supervisory Strategy 2014-2018. Report, pp. 6, 19.

  135. AFS Act, art 1:90(4).

  136. IMF (2013) Financial Sector Assessment Program: Detailed Assessment of Observance – Insurance Core Principles. IMF Country Report No. 13/134, May 2013, pp. 21-2. On page 49, the IMF noted the following procedures were in place with respect to exchanging information: ‘Where a financial institution commit[s] serious breaches of the rules of conduct, the FSMA shall inform the NBB of the alleged breach before taking the following measures: a) prohibiting or suspending (in whole or in part) the activities of the institution concerned; or b) ordering the replacement of its management. Where such breaches are systematic, the FSMA may request the NBB to revoke the license of the institution. The NBB may only refuse the request if the withdrawal is likely to compromise the stability of the financial system and the FSMA may challenge the NBB’s decision before the MoF, who makes a final decision.’

  137. Statutes of the NBB, art 56.

  138. Law of 2 August 2002, art 74. The legislation also outlines the limited grounds under which confidential information may be communicated.

  139. Memorandum of Understanding between the Financial Markets Authority and the Reserve Bank of New Zealand (9 September 2011). Available at http://www.rbnz.govt.nz/regulation_and_supervision/banks/relationships/4525498.pdf.

  140. For example, the MoU makes the following comments with respect to information exchange: (i) For example, the MoU makes the following comments with respect to information exchange: The exchange of relevant information in a timely manner is essential to both FMA and RBNZ… (ii) Both agencies agree to make relevant information available to the other, subject to any legislative requirements, in a timely and efficient manner… (iii) Should either agency, during the course of its work, identify a harm or potential harm falling within the jurisdiction of the other, where legal, all relevant information will be passed to the other agency as a matter of urgency… (iv) Where the cost of providing material under this MoU is considered significant by either agency, the actual and mutually agreed costs can be fairly claimed from the other…

  141. Memorandum of Understanding between the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, 18 May 2010. Available at http://www.apra.gov.au/AboutAPRA/Documents/ASIC-MoU.pdf.

  142. Memorandum of Understanding between the Financial Markets Authority and the Reserve Bank of New Zealand (9 September 2011). Available at http://www.rbnz.govt.nz/regulation_and_supervision/banks/relationships/4525498.pdf.

  143. Bank of England. (2015) Memoranda of Understanding, http://www.bankofengland.co.uk/about/Pages/mous/default.aspx, accessed 7 June 2015.

  144. FS Act, Part 2 amendments to the FSM Act, s 3E(1)(a).

  145. FS Act, Part 2 amendments to the FSM Act, s 3E(4),(5) & (6).

  146. FS Act, s 65.

  147. Bank of England (2015) Memoranda of Understanding, http://www.bankofengland.co.uk/about/Pages/mous/default.aspx, accessed 7 June 2015.

  148. FS Act, s 66.

  149. Covenant between Stichting Autoriteit Financiële Markten and De Nederlandsche Bank N.V, 2.

  150. Netherlands Authority for the Financial Markets. (2015) External Stakeholders, http://www.afm.nl/en/professionals/over-afm/organisatie/ext-stakeholders, accessed 22 February 2015.

  151. Hengel and others (n 1) p. 191. They noted with respect to the GFC: ‘An important advantage was that the laws allowed for information sharing in the context of crisis management. Already before the crisis, DNB and the AFM had concluded a covenant that specified cooperation and joint responsibilities between both supervisors. The respective roles of DNB and the Ministry of Finance in crisis management were described in a Memorandum of Understanding. On that basis a crisis management group was set up to include also representatives from the Ministry of Finance and the AFM, which met daily.’

  152. Covenant between Stichting Autoriteit Financiële Markten and De Nederlandsche Bank N.V, 2.

  153. Cooperation Protocol Between the NBB and the Financial Services and Markets Authority in the Field of Supervision and Oversight of Market Infrastructures (translation of the MoU dated 18 October 2012). Available at https://www.nbb.be/doc/cp/eng/vi/accord_collaboration/accord/pdf/protocole_nbb_fsma.pdf. The NBB has noted that ‘the “twin peaks” model was… reinforced by the signing of cooperation agreements between the Bank and the Financial Services and Markets Authority (FSMA) with the aim of improving the exchange of information between these two institutions’: NBB (n 124), p. 212.

  154. Law of 2 August 2002, art 45bis.

  155. Cooperation Protocol Between the NBB and the Financial Services and Markets Authority in the Field of Supervision and Oversight of Market Infrastructures (translation of the MoU dated 18 October 2012), p. 1.

  156. See, for example, arts 1-7, and arts 9-18 on the more specific aspects of information sharing, such as the deadlines in which requests for information must be addressed.

  157. Cooperation Protocol Between the NBB and the Financial Services and Markets Authority in the Field of Supervision and Oversight of Market Infrastructures (translation of the MoU dated 18 October 2012), p. 11.

  158. Reserve Bank of New Zealand (2013) Council of Financial Regulators – Terms of Reference, http://www.rbnz.govt.nz/regulation_and_supervision/banks/relationships/4525791.html, accessed 25 May 2015.

  159. The Council of Financial Regulators (2015) About the CFR, http://www.cfr.gov.au/about-cfr/index.html, accessed 11 May 2015. See also IMF, ‘Australia: Core Principles’ (n 5): ‘The CFR does not have a legal personality, nor does it have powers separate from its member agencies. Its members share information and views and advise the Government on Australia’s financial system architecture. APRA and the RBA both have mandates for financial stability and have legal gateways to share institution-level data that is needed for them to carry out their respective duties.’

  160. Reserve Bank of Australia, Submission, Financial System Inquiry, 2014, p. 66.

  161. International Monetary Fund (2011) United Kingdom: Financial System Stability Assessment, p. 37.

  162. FS Act, Part 1 amendments to the FSM Act, s 9H.

  163. FS Act, Part 1 amendments to the FSM Act, s 9O.

  164. FS Act, Part 1 amendments to the FSM Act, s 9P.

  165. FS Act, Part 1 amendments to the FSM Act, s 9Q.

  166. Financial Stability Board (FSB) (2014) Peer Review of the Netherlands, p. 23.

  167. See http://www.financieelstabiliteitscomite.nl/en/publications.

  168. Financial Stability Committee (2015) About the FSC, http://www.financieelstabiliteitscomite.nl/en/about_fsc, accessed 22 February 2015.

  169. Memorandum of Understanding between the NBB and the Financial Services and Markets Authority, art 6.

  170. Memorandum of Understanding between the NBB and the Financial Services and Markets Authority, art 24.

  171. KPMG, Submission, Financial System Inquiry, 31 March 2014, p. 5.

  172. As part of it submission to the FSI, the National Australia Bank recommended that ‘the Council of Financial Regulators (CFR) should be given a more formal structure and be tasked by the Treasurer to coordinate the implementation of regulatory change by APRA and ASIC: NAB, Submission, Financial System Inquiry, March 2014, s 3.2.2.

  173. This reflects recent changes under the Bank of England and Financial Services Act 2016. See also Bank of England (2015) Financial Policy Committee, http://www.bankofengland.co.uk/financialstability/pages/fpc/default.aspx, accessed 22 February 2015.

  174. Memorandum of Understanding between the NBB and the Financial Services and Markets Authority, art 24.

  175. Jeffrey Carmichael (2003) Australia’s Approach to Regulatory Reform. Paper given at World Bank Regulation Conference, December 2003, p. 3. Available at http://info.worldbank.org/etools/docs/library/86146/Carmichael_Australia.doc.

  176. For a fuller discussion of hard law and soft law, see generally Godwin and Ramsay (n 6).

Download references

Acknowledgments

This article is part of a research project funded by the Melbourne Law School and the Centre for International Finance and Regulation entitled ‘Financial System Regulation – is Australia’s “Twin Peaks” Approach a Model for China?’ (see http://www.cifr.edu.au). The authors would like to thank Steve Kourabas and the anonymous reviewers for their helpful and insightful comments on this paper.

Author information

Authors and Affiliations

  1. The University of Melbourne, Melbourne, Australia

    Andrew Godwin, Timothy Howse & Ian Ramsay

Authors
  1. Andrew Godwin
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Timothy Howse
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ian Ramsay
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Andrew Godwin.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Godwin, A., Howse, T. & Ramsay, I. A jurisdictional comparison of the twin peaks model of financial regulation. J Bank Regul 18, 103–131 (2017). https://doi.org/10.1057/s41261-016-0005-0

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41261-016-0005-0

Keywords

Search

Navigation