More stringent regulation of the financial services sector will hamper innovation, according to City minister John Glen.
He said the hardest part of his job as City minister was to strike a balance between allowing companies to take suitable levels of risk, and protecting the interests of consumers and wider society.
Speaking at the CityUK’s annual conference in London yesterday (June 20) Mr Glen said: "The key lesson for me has been the importance of striking the right balance between risk and regulation. It’s not easy. In fact, it’s probably the hardest part of being City minister.
"Occasionally I see a high profile commercial failure making headlines; inevitably it always generates calls for more regulation.
"My worry is that if you ratchet up the cost of regulation, you will drive our fintechs and start-ups overseas, along with all the promise and opportunity they represent. And I don’t believe you can have an enterprising, dynamic and competitive environment without a degree of risk. Few great entrepreneurs follow a linear path. Risk is a spur for competition. It’s what pushes us forward.
"My view is that so long as we guard against systemic risk – and safeguard consumers - we should do our utmost to create the space for enterprise and innovation to thrive.”
Mr Glen said the UK financial services sector could survive Brexit, and that a sharp cut in regulation from policy makers is not needed.
He said: "In all my conversations with our global friends there is a recurrent view. While there are many other European financial hubs, each with their individual strengths, none of them can match all that London has to offer.
"And if they believe in our future, then so should we. Everything I have seen in the past 17 months gives me reason to be confident."
Last year the Financial Conduct Authority said the UK's exit from the EU would not lead to a "race to the bottom" on regulation.