The Observatory’s policy paper on how to improve responsibility in financial innovation through a reconsideration of New Product Committees is now published in JFRC: “Towards a practical approach to responsible innovation in finance: New Product Committees revisited”, Journal of Financial Regulation and Compliance, vol. 20, iss. 2, pp. 147-168.
This paper is the outcome of the work conducted by the Working Group on Responsible Innovation in Finance of the Observatory for Responsible Innovation at Mines ParisTech (an earlier version of the paper is freely accessible here). It examines the potentials of New Product Committees (i.e. New Product Approval) inside investment banks as organizational sites for the development of responsible innovation in finance. The manifold interpretations of the notion of responsibility are first briefly discussed. The functioning of New Product Committees in the financial services industry is then presented in detail. The features of New Product Committees are finally appraised in the light of the different interpretations of the notion of responsibility. The paper concludes with a series of policy implications and recommendations.
A shorter companion piece which summarizes the policy-oriented conclusions is freely available in the latest issue of Risk & Regulation, the LSE CARR magazine (iss. 23, Summer 2012, pp. 18-19). A quick quote from that piece: “New Product Committees are meant to be spaces in which responsibility for the consequences of innovation – including the negative ones – is (or can be) collectively taken. But is that really the case? It is up to bankers and regulators to look into this as a serious potential.”
