Chairman of the Financial Services Authority Lord Turner has called for a debate on whether changes in the capital regulation of banks should be combined with changes in accounting approaches. Speaking for the first time in front of an insurance audience, at the Association of British Insurers' biennial conference with KPMG, Turner was emphatic about a need for a major change to financial regulation at European level, with a greater degree of cooperation to identify risk. 'We need mechanisms to ensure adequate supervisory standards and to identify and mitigate prudential risks in cross-border banks,' he said. Turner also expressed concern that there were a lot of issues closer to home in the UK's financial sector that also needed to be resolved.. 'We need major changes in our approaches to capital adequacy, liquidity, hedge funds, remuneration, and credit rating agencies. We have extremely difficult issues to address in the regulation and supervision of large cross-border banks,' he said. The ABI has argued in its report Restoring Market Confidence that the current division of responsibilites should remain unchanged. Turner told the conference that if that happens, 'it will be essential that the Bank and the FSA work closely together'.