Reforming Britain’s Financial Regulations: An Urgent Call for Ambitious Growth Mindset

The proposal of the “Edinburgh Reforms” by the finance minister, Jeremy Hunt, over a year ago was aimed at sustaining London’s financial centre in the wake of Brexit. The objective was to uphold global competitiveness despite being largely disconnected from the European Union. However, industry leaders are emphasising the necessity for regulatory bodies to adopt an “ambitious growth mindset” in order to expedite the implementation of these reforms and prevent the exodus of financial business to other locations.

Bruce Carnegie-Brown, chair of TheCityUK’s leadership council, underscored the importance of regulators aligning with the government’s policies. He emphasised the imperative for expeditious approval processes for key industry appointments, particularly in the banking and insurance sectors. Delays in these processes are prompting companies to establish their operations outside of the UK, thereby undermining the objectives of the Edinburgh Reforms.

Carnegie-Brown provided examples of the substantial timeframes involved in these regulatory processes. He observed that while the Lloyd’s of London insurance market is capable of evaluating and endorsing a new underwriting syndicate within 30 days, external regulators often take several months to make a decision. This not only impedes business growth, but also propels companies to seek alternative locations for their operations.

The Bank of England and Financial Conduct Authority have been urged to prioritise the global competitiveness and growth of the City when formulating regulations. However, BoE Deputy Governor Sam Woods stressed the necessity for regulatory actions to align with the government’s initiatives in order to provide a comprehensive solution for the industry. Woods assured that the backlog in top hire approvals has been addressed, with 98% of applications being dealt with within the three-month deadline in the last quarter of 2023.

While the financial industry acknowledges the Edinburgh Reforms as a positive step, there is an urgent need for a more proactive and rapid implementation through an “ambitious growth mindset”. Industry leaders are calling for a collaborative effort between the government and regulatory bodies to ensure that the reforms effectively support London’s financial sector in this post-Brexit era. Failure to act swiftly could result in further exodus of financial business from the UK to other global financial centres.