Conservative Party leader Kemi Badenoch is set to argue that the City of London should be freed from regulatory constraints to help boost growth across Britain. In a speech on Thursday at the CityUK annual conference, she will call for the Financial Service Ombudsman (FSO) to be replaced as part of an overhaul of financial sector regulation.
Red Tape Burden
Mrs Badenoch will say the burden of red tape has become too high, creating a risk-averse culture in Britain's financial industries. She will state: "After the financial crisis, the City was increasingly treated as a problem to be managed, rather than an asset to be championed. As a result it has suffered."
She will add: "Decisions were made to make an example of the City. And, more than any other nation in the world, Britain tried to remove all risk from our financial markets. For nearly 20 years, Government has been aiming for a zero-risk environment. The problem is that there are two sides to the risk equation. If you eliminate risk, you also eliminate reward, you eliminate opportunity, you eliminate innovation, you eliminate growth. This is one of the reasons why the UK has become a low growth economy."
Proposed Measures
Among the measures Mrs Badenoch wants to take is scrapping the FSO, which the Tories said had become unfit for purpose and should be replaced with a streamlined regulatory process. She also wants to abolish the ring-fencing regime, which separates banks' retail and investment arms, and which the Conservatives said prevents them from investing in the real economy.
The Tory leader also wants to adjust capital requirements for banks – the amount of cash they hold – with the aim of releasing £450 billion for investment.
