Ussher says light-touch regulation to continue

LONDON (Reuters) - The government will not abandon its light-touch regulatory framework in the wake of last month's Northern Rock crisis, the country's first bank run in more than a century, Treasury minister Kitty Ussher will say on Wednesday.

In a speech to fund managers, Ussher denied that events over the last month had dented London's reputation as a financial centre.

"There have been mutterings abroad about what has been going on here at home," Ussher will say, according to her office.

"That our concept of principles-based regulation has been found wanting by recent events - and that a more prescriptive, rules-based approach like that adopted elsewhere has been vindicated. I reject this absolutely."

Britain's regulatory framework has come under fire in recent weeks after bank Northern Rock fell foul of the global credit crunch and had to get emergency funds from the Bank of England, prompting a run which only stopped when the government stepped in.

The minister, who is responsible for the City of London, will say that while there were lessons to be learnt, any response should be measured.

"It would be madness to respond to recent events in a way that jeopardises the very things we hold dear," she will say.

"So our decision is this: not for us the knee-jerk reaction of a Sarbanes-Oxley for Britain, not for us the stifling rigidity of a pan-European regulator."

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