Government unveils City rules overhaul

The government has announced a major overhaul of financial regulations to “bolster the competitiveness of the UK as a global financial centre and deliver better outcomes for consumers and businesses”.

Marker for the City of London at London Bridge

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Experts said the move, launched by Chancellor of the Exchequer Jeremy Hunt at a conference in Edinburgh on Friday, would abolish many of the regulatory restrictions introduced on banks and other financial services after the 2008 crisis.

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The Treasury in London said the package of more than 30 reforms would reduce crippling bureaucracy faced by the industry and would "turbocharge growth".One of the main aims of the changes will make it easier for foreign banks and other overseas institutions to relocate staff to the UK.Mr 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."He went on to add that the reforms "seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses".Simon Jack, BBC Business Editor, commented that, in the wake of the financial crisis, a new regime was brought in to increase the personal accountability of senior risk-taking staff."But City insiders say a major disadvantage it imposes is the lengthy process of getting the movement of senior staff to the UK approved by the regulator - making London less attractive to foreign firms," he wrote.

What are the Edinburgh Reforms?

The government's package, known as the Edinburgh Reforms, includes plans to consult on a new central bank digital currency; a change in tax rules for investment trusts involved in real estate; reform of rules around short selling; and the trial of a new trading venue that would allow companies to raise money from investors before officially floating shares on the market.In a statement, the Treasury said the existing Financial Services and Markets Act 2000 would be amended to give the Financial Conduct Authority a secondary remit to "facilitate, subject to aligning with relevant international standards, the international competitiveness of the UK economy (including, in particular, the financial services sector)". Chris Hayward, Policy Chairman at the City of London Corporation, told BBC Radio 4's Today programme: “This is not about deregulation, this is about growth. We need the help of good growth and good regulation at the same time - they are two sides of the same coin.“It’s not a race to the bottom, in my view - it’s a chance to actually grow our economy and I think we should be very excited about it. It’s positive news for financial services.”

Boosting UK competitiveness

Kay Swinburne, Vice Chair of KPMG UK’s financial services practice, told CNBC that the reforms were a “step closer to making regulation more efficient rather than a race to the bottom".She added: “While the majority of these reforms have been trailed before, they represent a step towards future-proofing the competitiveness and long-term growth of the UK’s financial services industry while seeking to maintain standards.”Miles Celic, CEO of the financial services trade body TheCityUK, said: "Boosting the industry's competitiveness and securing the UK's position as a world-leading international financial centre is an investment in the nation’s success and in communities across the country.“This is a comprehensive package of reforms which, if implemented effectively and alongside the Financial Services & Markets Bill, should help boost the UK's attractiveness as a place for businesses to list, invest, grow and do business. "It's also positive to see further detail on how the regulators will be expected to help boost growth and promote the international competitiveness of the UK."We look forward to working closely with government and regulators to ensure that the wider landscape of financial services regulation is coherent, stable and tailored to Britain’s needs. Ensuring the regulators deliver on their commitment to enhancing operational efficiency will also be crucial.” Read the full list of reforms.

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