The government sets out banking reforms to ‘turbocharge’ the economy
More than 30 reforms have been proposed for the banking sector which are aimed at cutting red tape. The government says these plans are the biggest shake up to the financial industry for three decades.
The package has been called the “Edinburgh Reforms” and the chancellor will set them out today, at a meeting with banking bosses and insurers in Edinburgh.
Hunt says the plans will “seize the benefits of Brexit” by setting out detailed proposals for “repealing burdensome pieces” of EU law.
The Edinburgh Reforms
The package of reforms cover many different areas. For example the ring fencing rules that force financial institutions to separate retail and investment banking, introduced after the 2008 financial crash to protect the country from another crisis, are set to be reviewed and there will be changes to the Building Societies Act 1986.
There are also proposals to review the rules for investment trusts dealing in real estate and to review investment short selling.
A consultation on a new central bank digital currency has also been announced along with plans to “modernise” the Consumer Credit Act. The government said the reforms will work to simplify the act “to encourage innovation in the credit sector and cutting costs for consumers and businesses”.
Several reforms have already been announced by the chancellor including getting rid of bankers’ bonuses.
The news of reforms to the Building Societies Act was welcomed by the Building Societies Association (BSA).
Robin Fieth, BSA Chief Executive said: “We have been working with the Treasury for some time on secondary legislation that will partially update the Building Societies Act, which has not been fully revised for 25 years.
“We heartily welcome this announcement which marks excellent progress in delivering legislation that is fit for purpose, enabling building societies which are a key part of today’s financial services sector to better serve their members and provide competition in financial services.”
“Delivering reform of burdensome EU laws”
The Edinburgh Reforms focus largely on Brexit, with the Chancellor repeatedly stating that they are a chance to “repeal and replace” EU laws. Yet many of the proposals relate to UK laws which are not related to the EU.
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 home-grown 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 announcement comes a day after the chancellor met with mortgage lenders and Money Saving Expert founder Martin Lewis, to discuss ways to help those struggling with mortgage payments.
“London’s financial reputation has been severely held back since Brexit”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “London’s financial reputation has been severely held back since Brexit, right at a time when the ‘powers that be’ have tried to encourage investment and growth in a big way.
“Sadly, the allure simply isn’t there, with many of the UK’s brightest companies being snapped up by overseas investors, and London losing its top share-dealing status. Hunt is widely expected to scorch red tape and update or replace a number of EU regulations.
“It’s clear the government is going for growth, but the extent of today’s package will need to be vast, if it’s to have any meaningful impact for brand UK at a time when the country struggles with a slowing economy and cost-of-living crisis.”