City of London “over-regulated”
The UK financial services industry is at risk from a “tidal wave” of over-regulation, the Confederation of Business Industry (CBI) has warned.
In its report, Financial Services: Promoting a Global Champion, the employers’ body calls for a halt to needless red tape, which is “swamping” the sector which employs over a million people and generates more than five per cent of GDP.
The CBI forecast between 2004 and 2006 over 20 EU measures could be imposed on British firms, resulting in regulation and consultation “overload”.
It also warns complacency and incompetence by bureaucrats in Brussels could imperil the global standing of the City of London and undermine the “massive contribution” of the finance sector as a whole to the UK economy.
Calling for a moratorium on any new regulation, John Cridland, CBI deputy director general, said: “The UK financial services industry is one of the best in the world. It’s a major contributor to UK employment, output and balance of payments, but that is at risk.
“A robust regulatory environment is essential. Internationally it’s regarded as one of the strengths of UK financial services.
“But companies are being battered by the impact of relentless new regulation.
“It’s forcing a dramatic and wasteful diversion of effort away from the daily battle to keep the UK ahead of its competitors.
“It’s vital that companies are given a substantial breathing space and not another onslaught.”
The CBI is calling on ministers to play a greater role in fighting the corner of business and notes an absence of joined-up thinking across government departments, evidenced by the “overlap” in three separate consultations by the DTI, FSA and Treasury on the Distance Marketing Directive and parallel probes into credit cards by the European Commission, OFT and Treasury Select Committee.
“Companies know that they have to overcome the fall out from issues such as endowment mis-selling and are determined to put their own house in order,” said Mr Cridland.
“But they clearly feel that the entire industry is being unfairly tarred with the same brush.
“They need the government to champion their cause even more strongly at home and in Brussels.”
The CBI report outlines a 16-point “action plan” to maintain the UK’s pre-eminence in financial services.
