Chancellor axes swathes of regulation under Edinburgh reforms

Chancellor axes swathes of regulation under Edinburgh reforms
Chancellor Jeremy Hunt, who will unveil the Edinburgh reforms today (REUTERS/Henry Nicholls/File Photo)

The senior managers regime and packaged retail and insurance-based investment products regulation (Priips) will be reviewed under new measures announced by the chancellor, aimed at “turbocharging” growth in the UK.

Jeremy Hunt will unveil 30 reforms to regulation in Edinburgh today (December 9), rolling back a number of rules created after the financial crash in 2008.

This includes repealing the Priips regulation, and reviewing the senior managers regime, which holds financial services executives responsible for anything that happens under their watch.

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Regulators will be given a new “secondary objective” to encourage growth in the UK economy, and the government will increase the pace of consolidation in defined contribution pension schemes.

A consultation will be launched on the VAT treatment of fund management, and improvements will be made on the tax rules for real estate investment trusts.

Finally, the government will also publish an updated green finance strategy early next year, and will consult on bringing ESG ratings providers under the Financial Conduct Authority's regulation.

The chancellor also said the long-term asset fund had recently received its first application.

Hunt said the government is committed to securing the UK’s status as “one of the most open, dynamic and competitive financial services hubs” in the world.

“The Edinburgh Reforms seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses,” he said.

“And we will go further – delivering reform of burdensome EU laws that choke off growth in other industries such as digital technology and life sciences.”

The regulations are not without their detractors, with a former chair of the independent commission on banking warning the secondary objective for the FCA was either “pointless or dangerous”, and the FT reporting that regulators are privately concerned about the impact of looser regulation for banks in the midst of a recession.

Andrew Griffith, economic secretary to the Treasury, said: “The UK is a financial services superpower – and we have long benefited from, and are committed to, high quality regulatory standards.

“Our reforms deliver smarter regulation of financial services that will unlock growth and opportunity in towns and cities across the UK.”

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said London’s financial reputation has been “severely held back since Brexit”, right at a time when the government has tried to encourage investment and growth.

“It is clear the government is going for growth, but the extent of today’s package will need to be vast, if it’s to have any meaningful impact for brand UK at a time when the country struggles with a slowing economy and cost-of-living crisis.”