UK reforms to its financial sector
The UK government on Friday announced significant changes to financial regulations that they claim will reform EU laws that “choke the growth.”
The 30-point plan includes an amendment to the requirement for banks to differentiate their retail activities from investment arm. Initially introduced in the aftermath of the 2008 Financial Crisis, the measure would not apply to retail-focused banks.
The government also announced that it would review the rules governing the accountability of financial executives, a second post-2008 rule. The Senior Managers’ Regime was introduced in 2016 and stipulates that employees of companies that are regulated are liable for penalties for bad behavior, workplace culture, or poor decision-making.
The changes included within the package known as”the Edinburgh Reforms, also have the review of rules regarding short-selling, the way companies report at the exchanges, how insurers report on their balance sheets, and Real Estate Investment Trusts.
Financial Minister Jeremy Hunt said he wanted to secure the UK’s standing to be “one of the world’s most transparent, competitive and dynamic financial services hubs around the globe.”
“The Edinburgh Reforms seize on our Brexit freedoms to create an efficient and domestically-created regulatory system that is in the best interests of the British business and the British people,” he said in an announcement.
“We’ll go even further by introducing reforms to heavy EU laws that hinder growth in other sectors like the life sciences and digital technologies.”
The government claims that reforms as a way to take advantage of the freedoms provided by Brexit by stating there are hundreds of webpages of EU laws that govern finance will have to be changed or discarded.
Many people believe that Britain’s leaving the EU has hurt the competitiveness of its financial and financial sectors, with Reuters noting that London has lost billions of euros in daily derivatives and stock trading on EU exchanges following its exit from the EU. Researchers from London School of Economics London School of Economics declared earlier that finance would be among the industries most affected by Brexit.
Looking to boost the UK’s slow economic growth is also an issue for the government, especially with the nation predicted to be at the edge of a prolonged recession.
The earlier-announced elimination from the UK cap on bankers’ bonuses was among the few policy announcements made during Hunt’s first term, Kwasi Kwarteng, who remained even in place after the release of his chaos-filled “mini-budget.”
Kwarteng stated that he was planning the possibility of a “Big Bang 2” about the liberalization of the London Stock Exchange in the 1980s that attracted many international banks and investment companies in this area of the UK and quickly expanded the size of the City of London’s financial industry.
Another reform proposal could see the authority of regulators expanded to include facilitating the development of competition in the UK economy, particularly the financial services industry.
But, John Vickers, former chairman of the Independent Commission on Banking, cautioned in a note to Financial Times this week that the “special favoritism of the financial services industry … might be harmful to it, just as we witnessed fifteen decades ago.”
Tulip Siddiq, the opposition Labour party’s shadow city minister, described the proposed reforms as a “race towards the end.”
“Introducing greater risk and possibly more financial instability since there is no way to control the backbenchers in this Tory government,” she claimed, referring to the ongoing fights in the Conservative Party. Conservative Party.
“Reforms like Ring Fencing and the Senior Managers Regime were introduced with good reasons. It isn’t looking for any weak consolation prize for being taken for a ride within negotiations for the Tories’ Brexit deal or more empty promises about deregulation.”
Kay Swinburne, vice chair of KPMG UK Financial Services practice Kay Swinburne, vice chair of KPMG UK’s financial services practice, CNBC in an email that the reforms are a “step towards making the regulation effective rather than a race for the lowest point.”
“While many of these changes were discussed previously, they are an important move towards ensuring future-proofing the competitiveness and growth in the United Kingdom’s Financial Services industry while seeking to ensure standards are maintained.”
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