The chancellor has announced plans to reform and repeal a number of City regulations, including rules originally meant to protect the UK from another financial crisis, in order to “unlock” investment and “turbocharge” growth across the UK.
Jeremy Hunt’s package of more than 30 reforms was announced as he travelled to Edinburgh to meet a group of chief executives from banks and insurers, who the government hopes will be in a stronger position to grow and compete with international peers as a result of the deregulation drive.
The package, known as the Edinburgh Reforms, is wide-ranging, spanning from plans to consult on a new central bank digital currency to changing tax rules for investment trusts involved in real estate, and reforming rules around short selling – where investors bet that the price of an asset will drop.
The government said it also plans to trial a new trading venue that would operate intermittently but allow companies to raise money from investors before officially floating shares on the public market.
However, the package also includes plans to repeal UK rules introduced in the wake of the 2007-8 financial crisis, including the senior managers’ regime, which holds bosses personally and financially responsible for problems that occur on their watch, and the ringfencing rules that are intended to protect everyday customers by separating their deposits from riskier investment banking operations.
While both are UK rules that could have been changed regardless of leaving the EU, the government has tried to present the package as one of the ways the country is benefiting from Brexit.
Hunt said: “We are committed to securing the UK’s status as one of the most open, dynamic and competitive financial services hubs in the world. The Edinburgh Reforms seize on our Brexit freedoms to deliver an agile and homegrown regulatory regime that works in the interest of British people and our businesses.
“And we will go further – delivering reform of burdensome EU laws that choke off growth in other industries such as digital technology and life sciences.”
The Edinburgh Reforms includes a number of consultations, meant to “modernise” the Consumer Credit Act, which regulates credit card purchases and personal loans and dates back to the 1970s, as well as to update rules that cover funding and governance requirements for building societies.
Meanwhile, consultations will be launched around whether to regulate ratings agencies that review companies’ performance on environmental, social and governance issues, in order to ensure products are transparent and use consistent standards.
The government will also review EU rules that require brokers to charge clients for investment research separately from trading fees, which critics claim has reduced the competitiveness of the local researchers compared with rivals in other countries such as the US.
Source: The Guardian