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(Bloomberg) — The U.K. government will move away from talking about a “Big Bang 2” for the city of London, acknowledging the fact that changes will come slowly because of their complexity and opposition from critics.
Ministers are expected to stop using the phrase, a reference to the dramatic reforms in the 1980s that made London a global financial center, according to a person familiar with the matter. This shift reflects a desire to build support across a broader range of stakeholders and position growth in financial services as an opportunity for the wider country.
There is also a sense that the scope for rapid change is limited, some of those involved in the debate said.
Andrew Griffiths, the City minister, will unveil a relatively muted package of post-Brexit reforms on Friday to boost the UK’s financial services industry. The changes include relaxed ring-fencing capital rules to ease the burden on smaller banks.
Jeremy Hunt, the chancellor, is due to meet finance executives in Edinburgh to discuss opportunities for the sector.
The government’s plans could include reversing the EU MiFID II ban on banks bundling company research costs with other fees, deregulation of trading rules to increase flexibility for investors and reducing obligations for senior managers and firms on consumer protection. Involved in the discussion.
They also said that corporate governance reform could refer to increasing London’s attractiveness for listing and investment by trying to improve the relationship between companies and their shareholders, reducing the influence of proxy voting agencies and liberalizing guidance on non-executive pay.
It is a far cry from the far-reaching changes seen when Liz Truce was prime minister. Most of the reforms from that helter-skelter period have been shelved.
Risk premium
Griffith told an event at the Conservative Party conference this autumn that he believed the principle of caveat emptor – let the buyer beware – should be reinstated in financial services to reduce the burden on firms and encourage innovation. He also argued in a speech last week that there should be more “appropriate risk-taking” to create opportunities.
However, the minister is conflicted about his amendment, which he has been consulting on for weeks. He stepped down on new intervention powers on regulators after a high-profile campaign against him by the Bank of England.
Crypto reforms could be another flashpoint as there is concern among MPs and consumer groups that more people will lose money if they believe the sector is fully regulated.
The Treasury Select Committee is investigating crypto assets. “As crypto becomes more widespread, concerns about financial stability and consumer protection will become harder to ignore,” said Anthony Brown, a Conservative lawmaker on the committee.
MiFID regulations
As the UK has played a leading role in designing much of the EU’s financial services regulation, many in the City have argued that only limited areas need to be changed.
Some at the Financial Conduct Authority and the Treasury are skeptical that reining in rules on analyst research fees will have the desired effect of boosting reports written on smaller companies and thereby spurring investor interest, according to people close to the debate.
They said there is also a view within the big banks that customer duty, which is now in place, should not be dismantled. There is some ambivalence among finance executives about Griffith’s ideas because they believe they will be left out if the Labor Party wins the next general election.
Griffiths is also constrained by a desire to avoid further conflict with regulators, some officials within the Treasury and Conservative Party critics, according to the two people.
“We are committed to delivering ambitious reform of the UK financial services sector,” a Treasury spokesman said.
–With assistance from Alex Wickham.
©2022 Bloomberg LP
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