Jeremy’s Hunt sweeping financial services reforms announced today have been broadly welcomed although there is some concern that the lessons of the last financial crisis may not have been learnt.
The market certainly took the news in its stride with the FTSE 100 higher and banking shares firmer with Lloyds Banking Group PLC (LSE:LLOY) up 0.5%, and Barclays PLC (LSE:BARC) up 0.8%.
Commenting on the planned reforms, Jonathan Herbst, global head of financial services regulation at Norton Rose Fulbright said: “The direction of travel will definitely be welcome. There is no doubt the measures move the needle in some areas and it will be interesting to see how reforms relating to ring-fencing, the SMCR, PRIIPs, and research play out.”
But Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown noted: “It’s clear the government is going for growth, but it must strike the right balance between stoking the engines of growth in what has become a tepid environment, and not slashing standards too far.”
“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” she pointed out.
Victoria Scholar, head of investment, interactive investor agreed: "There is a risk that the Treasury is acting myopically, quickly forgetting the pre-2008 excessive risk-taking that ultimately led to the global financial crisis and the introduction of new regulation to prevent another similar catastrophe.”
Herbst was less concerned, saying that "it is important for people not to overplay this - there is no sense of any move back to a pre-financial crisis world.”
“Most of the UK regulatory regime reflects either international commitments or policy developed over many years to reflect the lessons of experience. So, the talk of a Big Bang 2 may well be overdone” he explained.
The policy chairman at the City of London Corporation Chris Hayward sided with Herbst: “This is not about deregulation, this is about growth.”
He told BBC Radio 4’s Today programme: “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.”
Alasdair Haynes, chief executive of Aquis Exchange, said the Chancellor's announcement "promotes competitiveness and growth".
Haynes commented: “It gives more power to the regulators to make faster and appropriate rule changes. This will bring equal opportunities allowing for competition, that in turn promotes innovation.”
“The City does not want to see deregulation, it wants good regulation that means consumers are protected. Today's announcements are an indication of an evolution – rather than revolution” he concluded.