Mansion House: Easing regulation is central to government’s financial services growth strategy
As the Chancellor prepares to deliver the Financial Services Growth and Competitiveness Strategy in her Mansion House speech this evening, plans to ease regulation on raising funds for businesses are immanent. It is estimated that the move could save businesses £40 million a year in regulatory costs, making the City of London more competitive.
Hugh Fairclough, partner and head of financial services at RSM UK said: “The current uncertainty around regulatory change is significantly hindering the financial services sector's ability to support UK businesses, so the removal of red tape to make business funding easier will generate real economic benefits. These businesses are the cornerstone of the UK economy, and without clear and consistent regulatory guidance, our capacity to serve them is constrained.
“Financial services provide fundamental support to the UK economy, attracting, investing and distributing the capital which enables businesses to grow and invest. But the sector hasn’t grown in real terms since 2010, so we need to see decisive action from the Chancellor, before other global centres close in. UK financial services must evolve in a way that lowers the cost of delivering services and enhances consumer protection, while also receiving the support from government and regulators to enable it to be innovative. This is a tricky balancing act, and anything which makes this easier is a welcome move.”
The Chancellor will announce streamlining of the Senior Manager and Certification Regime (SMCR) this evening, while changes to the tax-free cash ISA allowance have been put on hold. Instead, savers will be encouraged to become retail investors through a “tell Sid” style campaign which emphasises the benefits of owning shares in UK companies.
Hugh Fairclough added: “The Senior Manager and Certification regime (SMCR) was a key pillar of the post-financial crisis drive towards greater accountability in financial services. After the backlash against the potential reduction of cash ISA limits, the government may be looking for ways to increase growth and competitiveness without directly impacting consumers. Streamlining the SMCR doesn’t immediately open up new growth opportunities, but it should encourage innovation and competition. This might also encourage more risk taking, so appropriate guardrails will need to be in place to protect consumers. The past crises that have followed previous attempts to deregulate, including the 2008 banking crisis, must not be forgotten.
“it’s also crucial that we achieve alignment across the various potential regulatory changes within the sector. Such alignment would offer the clarity and certainty that financial services firms need to unlock the capital businesses need to meet the government's core growth objectives.”