- Industry happy with move on investment disclosures
- New green finance strategy
Instead of a “Big Bang 2.0”, the UK financial services sector now has “the Edinburgh reforms”. Chancellor Jeremy Hunt set out over 30 measures, intended to boost the sector’s prospects, in Scotland’s capital today across four areas – competitiveness, sustainable finance, technology and innovation, and consumers and businesses. The treasury said the reforms represent “taking advantage of the UK’s position outside the EU”.
Among the measures is a pledge to deliver the "outcomes of the secondary capital raising review" - one of which is the proposal to make it easier for private investors to participate in company share placings.
Another of the measures relates to the ringfencing rules introduced in the wake of the credit crunch, which aim to reduce risks in the banking system. These rules separate investment banking and retail banking operations at lenders with more than £25bn in retail deposits – the government will reform the legislation “to quickly improve the functionality of the existing regime” and will consult on increasing the deposit threshold to £35bn.
The senior managers' regime will also be reviewed, in the first quarter of next year. These rules make senior executives at banks and other types of financial business personally liable for breaches at their institutions, in certain circumstances.
In a move that sets it up for a showdown with regulators, the government also plans to issue “new remit letters for the PRA (Prudential Regulation Authority) and FCA (Financial Conduct Authority) with clear, targeted recommendations on growth and international competitiveness”.
On sustainable finance, the government will release an updated green finance strategy next year and could bring ESG ratings providers into a regulatory framework – the treasury said it “is acting to secure the UK as the best place in the world for responsible and sustainable investment”.
The government will also, amongst other things, consult on a UK retail central bank digital currency, release a plan for “repealing and reforming EU law”, replace the PRIIPs legislation (which sets out how retail funds need to disclose risks and rewards to investors) with a new disclosure regime, and look at the tax rules around real estate investment trusts.
The Association of Investment Companies said of the repeal of the PRIIPs legislation that "the investment company industry has just breathed a collective sigh of relief".
