Why have some countries chosen to create a single national financial services regulator? Four reasons predominate:
First, market developments - say, the increasing number of financial conglomerates and the blurring of boundaries between financial products - make sector-based regulation increasingly less viable. Most countries see cross-sector mergers and acquisitions in the financial services industry; and financial services firms expand through internal growth into new business sectors.
Indeed, groups that include some combination of banking, insurance, securities and fund management activities are increasingly common. Moreover, complex products that enable firms to unbundle, repackage and trade risks in ways that blur the boundaries between formerly distinct sectors are introduced consistently.
The UK was not the first country to favor a single regulator capable of regulating these conglomerates as groups, and understanding the cross-sector nature of their business. Norway, Denmark and Sweden led the way here, but many others soon followed, or announced an intention to do so.