Edinburgh Reforms: Financial shake-up welcomed by industry but charity warns of 'incredibly dangerous move'

A shake up of the UK’s financial sector in the wake of Brexit, dubbed the “Edinburgh Reforms”, has received a general thumbs-up from industry figures though the head of one charity branded it an “incredibly dangerous move”.

Outlining a package of more than 30 reforms in the Scottish capital, Chancellor Jeremy Hunt insisted the overhaul would cut red tape and “turbocharge” growth across the UK. He said the changes would seize on “Brexit freedoms”, with measures including a review of accountability rules for bankers and easing capital requirements for smaller lenders. The shake-up has been described by some as Big Bang 2.0 - following the financial Big Bang of the 1980s that kicked off a wave of deregulation.

The UK government has already announced that it will scrap a cap on bankers’ bonuses and allow insurance businesses to invest in long-term assets such as housing and wind farms to boost investment. Hunt has also promised to reform the UK prospectus regime to support stock market listings and capital raises.

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“We are committed to securing the UK’s status as one of the most open, dynamic and competitive financial services hubs in the world,” the Chancellor said. “The Edinburgh Reforms seize on our Brexit freedoms to deliver an agile and homegrown regulatory regime that works in the interest of British people and our businesses.”

The policy chairman at the City of London Corporation said major reform of the financial sector is something to be “excited” about. Chris Hayward denied that the move represents a regulatory “race to the bottom”. He said: “This is not about deregulation, this is about growth. We need the help of good growth and good regulation at the same time, they are two sides of the same coin.”

David Postings, chief executive of trade body UK Finance, said: “The comprehensive package of reforms the Chancellor has announced, coupled with the landmark Financial Services and Markets Bill, form a major step in ensuring the sector remains strong and internationally competitive.”

Anne Fairweather, head of government affairs and public policy at investment platform Hargreaves Lansdown, said: “The government has used today’s package of measures to underline this week’s commitment to reviewing the advice/guidance boundary. The review will be a game changer to allow firms to do all that they can to help people manage their finances better.”

However, Jesse Griffiths, chief executive of UK charity Finance Innovation Lab, said the government was “taking major risks with the stability of the economy”, adding: “Weakening the essential protections that were put in place after the global financial crisis is an incredibly dangerous move. Instead of prioritising the demands of big finance, the government should respond to the real needs of people and the planet by tackling the huge rise in financial exclusion.”

Chancellor Jeremy Hunt was outlining a series of reforms to the provision of financial services in the UK.

Betsy Williamson, founder of Scottish financial services recruiter Core-Asset Consulting, said: “Jeremy Hunt’s proposed reforms appear to be being roundly welcomed by the finance industry after years of ever-increasing regulations and burden.”

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Matt Barrett, chief executive at Adaptive Financial Consulting, said: “The announcement... is welcome in principle. However, in practice, it will need to be executed carefully to ensure financial institutions that have spent many years and a significant amount of investment preparing for the implementation of EU-wide regulations are not caught off-side.”