Irish Law Times

The Regulatory Restructuring of EU’s Financial Services Market

The regulatory restructuring of EU’s Financial Services Market


The financial crisis of 2007 catapulted corporate governance into the limelight, making it perhaps the most debated subject in the area of finance law. Issues surrounding compliance within the financial services market have since been fervently scrutinised and criticised with many legislators, regulators and academics advocating weak corporate governance as the impetus for the financial crisis.  Even now, the most recent scandal; that of the Co-op bank, continues to highlight the many illegalities and irregularities occurring within seemingly reputable financial institutions.

The economic turmoil which erupted as a result of the financial crisis caused immense distress and anguish for countless people across the globe. Reduced economic growth, rising unemployment and the evaporation of easy credit affected individuals, families, economies and governments in equal measure. This global and systemic failure of the financial system highlighted the ineffectiveness of many corporate governance practices worldwide. Catalysed by the burgeoning real estate bubble, excessively leveraged financial products, excessive remuneration,poor internal and external auditsand failures of Lehman Brothers, Merrill Lynch, Fannie Mae & Fanny Mac, Bear Stearns and other major financial firms, the “Great Recession” of 2007–09 saw America’s GDP contract by more than 4 per cent. A devastating economic tsunami soon radiated from the US, sending waves of uncertainty and panic across the world. Many countries with strong economic and political ties to the US were harshly affected, suffering severe decline in GDP.

Before and indeed during the crisis the governing boards of many leading financial services firms seemed unable to predict the affect of the numerous risky and ill-constructed decisions, taken by CEOs, traders and managers on firms, investors or society in general. To this end, regulators and legislators decided to take action in combating the failings at both national level and international level by implementing extensive changes to corporate governance in the financial sector…


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