The Chancellor has announced her intention to reform and repeal a number of city regulations, including rules originally intended to protect the UK from another financial crisis, in order to ‘unfreeze’ investment and to “energize” growth across the UK.
Jeremy Hunt’s package of more than 30 reforms was announced as he traveled to Edinburgh to meet a group of chief executives of banks and insurers, who the government hopes will be in a better position to grow and compete with their international peers in the wake of deregulation drive.
The package, known as the ‘Edinburgh reforms’, is wide-ranging, ranging from consultation plans on a new central bank digital currency to changing tax rules for investment trusts involved in property, and reforming the rules around short selling – where investors bet the price of an asset will go down.
The government said it also plans to test a new trading platform that would work intermittently but allow companies to raise funds from investors before officially launching shares on the public market.
However, the package also includes plans to repeal UK rules introduced in the wake of the 2007-2008 financial crisis, including the senior executives scheme, which holds bosses personally and financially responsible for issues that arise under their watch. and ring-fencing rules that aim to protect customers on a day-to-day basis by separating their deposits from riskier investment banking transactions.
While both are UK rules that could have been changed regardless of leaving the EU, the government has tried to portray the package as one of the ways the country benefits from Brexit.
Hunt said: “We are committed to securing the UK’s status as one of the most open, dynamic and competitive financial services centers in the world. The Edinburgh reforms seize our Brexit freedoms to put in place an agile, local regulatory regime that works in the interests of Britons and our businesses.
“And we will go further – reforming Europe’s burdensome laws that stifle growth in other sectors such as digital technology and life sciences.”
Edinburgh’s reforms include a number of consultations, intended to ‘modernise’ the Consumer Credit Act, which regulates credit card purchases and personal loans and dates back to the 1970s, as well as updating update the rules that cover the financing and governance requirements of building societies.
In the meantime, consultations will be launched on whether to regulate rating agencies that review corporate performance on environmental, social and governance issues, to ensure product transparency and the use of consistent standards.
The government will also revise EU rules that require brokers to charge clients for investment research separately from trading fees, which critics say has reduced the competitiveness of local researchers against rivals in d other countries like the United States.