In a substantial regulatory overhaul, the UK government has pronounced an extensive financial reform package seeking to repair ‘burdensome EU laws. The new plan amended the Edinburgh Financial Reforms with 30 measures to revise the 2008 crisis landmark regulations. Meanwhile, the Edinburgh Reform pushes for a law to mandate banks to separate consumer arms from investment banks.
The new reform modifies the certification and senior managers’ plan that holds bank leaders liable for the bank’s poor conduct. Another substantial reform is the statutory secondary objectives plan for the UK financial regulators. The Prudential Regulation Authority and the Financial Conduct Authority will now consider international competitiveness and impacts on growth as part of the ongoing regulatory activities.
Jeremy Hunt, the UK finance minister, defended the overhaul against accusations that the regime underrated the 2008 financial crisis and its lessons. Hunt insists that the government had learned from the financial crisis and that banks had become more assertive. In any case, the Labor Party government of 2008 spent about 137 billion to bail out banks. Hunt explained that the new reform would work, thanks to the post-Brexit regulatory freedoms.
On the other hand, critics argue that Brexit has caused malaise in the UK financial sector. They explain that local firms lost direct access to EU passport rights and financial markets when the UK exited the European Union. In other words, they lost a set of EU laws that enable companies in a member country to conduct business in member countries freely. Yet, numerous influential business groups have welcomed the new reform.
The CBI (Confederation of British Industry), which marks the biggest business lobby group in the UK, says that the new reform will help to establish a future-focused, competitive, and more dynamic financial sector. On the other hand, the CLC (City of London Corporation) said that the new reform wouldn’t weaken the UK financial standards. Instead, it is a great move, and investors should welcome it. However, the Labor Party opposes the new reforms.
Generally, the party insists that the reforms are part of the ‘race to the bottom.’ The party’s spokesman explained that the reform altered previous laws. Thus, changing previous laws could harm the financial industry by introducing economic instability. Above all, other top financial analysts are wary that the new plan will overhaul ring-fencing rules in the UK government. They argue that removing or scaling down these regulations would deter growth or even subject the economy to a repeat of the 2008 crisis.
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