Future bright as long as there is no regulatory blight
The long awaited report by some of the UK’s foremost financial services business leaders and the Chancellor of the Exchequer outlining a blue print for the country’s financial services industry for the next 15 years has been published with the message that there needs to be a realistic approach to regulation in the wake of the global banking crisis.
When UK Chancellor Alistair Darling announced in June last year that he would set up a group to examine the medium- to long-term challenges to London’s continued competitiveness in international financial markets there was a feeling that the core issues would be around the threat faced by the City from the low tax centres which were enticing increasing numbers of firms to domicile.
Little could those invited to participate have imagined the financial maelstrom which was about to be unleashed and in some respects the taxation issue was cast aside as the committee was faced with unpicking a global economic crisis unseen in almost a century.
At the time the high powered committee contained few insurance leaders other than ABI Chairman Archie Kane and Lloyd’s Chairman Lord Peter Levene. The Co-Chairman of the committee alongside the Chancellor was the then Citi Chairman Sir Win Bishoff and the report itself has been dominated by the potential ramifications of the banking crisis and how London position itself in the financial services sector of the future.
Thousands of jobs have been lost in the UK financial services sector in the past six months and every expectation is that there are more to come. Insurance remains one of those areas of the industry which is holding its own and as such is keen to ensure that any regulatory changes which are brought in to ensure we do not get a repeat of the problems of the past 12 months are not too onerous on the sector.
The report states that the UK’s financial services sector “can continue to be a world leader by working as a genuine partner of British business and emerging economies while embracing the need for global regulatory reform”.
It’s not rocket science but the group says it has been able to define a proposed ten to fifteen year framework for strengthening the UK’s place in “the rapidly changing global financial services industry”.
It also argues that the UK-based industry must seize opportunities to help meet the financial services needs of businesses and citizens in emerging markets, such as China.
It adds: “Effective regulation – with the UK taking a leading role in formulating global and European standards – will be the most important determinant of the sector’s future success.”
But Co-Chairman Sir Win in launching the report says the success of London as a financial centre would not have to come to the detriment of other global financial services hubs.
He said: said: "International financial services are not a zero sum game: progress in one country need not come at the expense of another. It is strongly in the UK's interest to build on its existing relationships with capital markets around the world, especially in the emerging economies. The timing is right as the financial landscape is changing around the world and we must make sure that world-class centres like London participate and benefit from this trend."
Peter Vipond, the ABI’s Director of Regulation adds: “This report contains many sensible and useful suggestions, which should help ensure the current banking crisis does not taint the benefits of financial services to consumers or the UK economy.
“The report also recognises that regulators must not read across from issues in banking to other sections of the financial services sector, and regulation must not inhibit the ability of firms to offer competitive products for consumers. As the report says, we need ‘responsible financial innovation with effective oversight’. “The goal of closer working by Government and industry to ensure more stable and effective systems of tax and regulation must be made a reality as soon as possible. ”
