Edinburgh Reforms – What does Big Bang 2.0 mean in practice? – Reaction

by | Dec 9, 2022

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Further to today’s news that Chancellor Hunt is to repeal and replace many of the laws governing financial services in the so called ‘Edinburgh Reforms’ industry experts have been sharing their views with us on what such changes might mean in practice.

Here is what they had to say:

Daniel Pinto, Founder and Chief Executive of Stanhope Capital Group: “For the Big Bang 2.0 not to end up a Big Whimper, the taskforces which are consulting must focus on facilitating a cultural reboot of the City, rather than protecting the status quo. We need a City which welcomes new, innovative, founder-led businesses – not an old world economy. London is still synonymous with big banks and FTSE100 companies, rather than the capital of venture funding for tomorrow’s businesses. 

“We need a more robust ecosystem of SMEs throughout the country, properly supported by well funded private equity investors. The Solvency II reforms are very welcome in that they will enable insurance companies to allocate more of their assets to this type of investments, for the greater good of the British economy. 

 

“A relaxation of some aspects of the MIFID rules which discouraged equity research on small and mid cap stocks over the last few years, would also be beneficial and enable these companies to raise more money in the public markets.

“Big banking was already riddled with conflicts, some of which led to excessive risk taking and failing to put clients first. Given the history of the big banks and their role in the GFC, any moves to deregulate the Senior Managers Regime and provide greater freedoms must be matched with appropriate guardrails around compliance.”

Emma Mogford, fund manager, Premier Miton Monthly Income Fund, commented: “I see this as the beginning of a more positive regulatory environment for banks in the UK.  Years of increasing capital requirements drove banks to reduce the riskier parts of their lending and the knock on effect of lower lending had been negative for economic growth.  Today’s announcement, combined with the reduction in the extra tax that banks pay, marks a swing in the pendulum towards more supportive regulation and recognises that the banks can now play an important part in reviving the UK economy.”

 

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