City and financial industry welcomes sweeping changes to financial regulation in the UK

Sweeping changes to financial regulation and banking in the UK outlined by the Chancellor of the Exchequer in his Mansion House speech have been broadly welcomed by the industry.

George Osborne announced plans to strengthening the system of banking regulation and making it clearer and more effective by transferring the oversight of banks, insurers and building societies for the Bank of England.
 
‘This brings certainty into how the industry is going to be regulated in the future. The industry will work with the government to ensure transition between regulatory authorities does not cause disruption to the financial system and is implemented swiftly and well,’ said Angela Knight, chief executive of the British Bankers’ Association.
 
‘The UK, and its banks, have already moved further and faster than other major economies on banking reform. The eye must be kept on the ball of good supervision and we must also give confidence to the many overseas banks operating here,’ she added.
 
But she warned against breaking up banks. ‘Other countries are in favour of universal banks and in the crisis they have been the most stable, with the so called narrow banks being the ones that failed most. A modern economy requires banks of all types and sizes. Breaking banks up here would quickly be felt by individuals and companies who would pay more for their mortgages and finance. The major changes that the big banks have already made have reduced the risks,’ she said.
 
‘We must pay very close attention to how we are seen from outside the UK. We are a major financial centre and we have to get that message across. We must do it right and not give the impression that we’re taking a unilateral leap into the dark,’ she added.
 
Despite the fact that the Financial Services Authority (FSA) will ceases to exist, its chairman Lord Turner welcomed the changes to financial regulation.
   
The FSA’s will remain chief executive up to the creation of a new prudential authority to oversee the transition and will the first chief executive of the Prudential Authority and a Deputy Governor of the Bank of England."
 
‘The crisis demonstrated the need for new regulatory approaches and more intense supervision. But it also demonstrated the need to bridge the gap between macro-prudential policy and the supervision of individual firms. The Chancellor’s proposals for prudential regulation will enable us to do that, while building on the major changes we have made over the last few years. The timescale will enable us to manage the transition in a smooth and orderly way,’ said Turner.
 
‘The overall future shape of financial regulation is now much clearer and we are in a strong position to create a future regulatory system which builds on the FSA’s achievements over the last few years of major change,’ he added.
 
The London Stock Exchange gave its support to the new City regulatory structure. ‘The London Stock Exchange appreciates this strong decision from the government. The City was looking for leadership and certainty on the issue of financial regulation. We believe that the Bank of England is the right place for the macro-prudential regulation of the economy, the regulation of banking institutions and the oversight of balance sheet organisations,’ said Xavier Rolet, chief executive of the London Stock Exchange Group.
 
‘We support the formation of a dedicated Consumer Protection and Markets Authority, which we hope will work to re-build trust between consumers and the financial services industry,’ he added.