A regulatory crackdown on the financial industry is likely after the current crisis but will face obstacles, an economist has predicted.

Stricter regulation is being demanded by politicians, while the Financial Services Authority has announced it is recruiting additional staff as part of a more stringent regulatory approach.

“The history of regulation is largely one of regulators trying to catch up after a crisis has arisen,” said Professor Catherine Schenk, from the World Economy and Finance Research Programme at the University of Glasgow.

However, this approach is not necessarily the most effective.

“The experience of global crises shows that new guidelines tend to be aimed at the problems that caused the last crisis rather than anticipating the next source of weakness.”

Professor Schenk, has highlighted several obstacles that regulators will face in policing the financial world.

These include the difficulties of tracking complex transactions and fears of pushing markets to poorly regulated off-shore centres.

A lack of agreement between nations on the costs and benefits of greater global regulation and perceived threats to national sovereignty will also prove difficult to overcome.

Professor Schenk added: “The financial sector is undoubtedly a very difficult and complex one to regulate.

“The current initiative, known as Basle II took nine years to develop and has now been over-run by current events.

“I think much will now come down to how the regulators police the new regulations which will be developed, and to what extent different national regulatory regimes can succeed in creating and implementing common approaches and features.”