The UK government has unveiled what it calls the biggest overhaul of financial regulation in over 30 years, with more than 30 reforms aimed at cutting red tape and boosting growth. Key changes include a review of rules that forced banks to separate retail banking from riskier investment operations, introduced after the 2008 financial crisis.
Critics argue the reforms risk forgetting the lessons of the crisis, which cost taxpayers £137bn in bailouts between 2007 and 2009, with a net loss of £36.4bn according to the Office for Budget Responsibility. Labour's shadow City minister Tulip Siddiq described the changes as a 'race to the bottom', while the Finance Innovation Lab warned of 'major risks with the stability of the economy'.
Chancellor Jeremy Hunt defended the reforms, saying they 'seize on our Brexit freedoms' and will secure the UK's status as a competitive financial hub. He insisted that 'guardrails' from the crisis remain and banks are healthier. However, the reforms include scrapping the cap on bankers' bonuses and easing rules on senior executive hiring and monitoring.
The ring-fencing rules, which cost big banks billions to implement, are being relaxed for mid-size banks like Virgin Money and TSB. City insiders say the current regime makes London less attractive to foreign firms due to lengthy approval processes for senior staff moves.
Despite the government's optimism, critics like Jesse Griffiths of the Finance Innovation Lab argue that weakening post-crisis protections is 'incredibly dangerous'. The reforms are part of the 'Edinburgh Reforms' package, presented as a post-Brexit opportunity to tailor regulation to the UK economy.
