The Mirror reports that our new Chancellor of the Exchequer, Rachel Reeves believes that the financial crisis era curbs have “gone too far2, and is seeking a lighter touch regulation of the City and the banks:
The Chancellor, delivering her first Mansion House speech, signalled lighter touch regulation of financial firms following restrictions imposed after the 2008 banking meltdown.
Ms Reeves has written to the UK’s City regulators telling them to “ensure a greater focus on supporting economic growth.” The Treasury insisted “high regulatory standards will be maintained” but rules should be “rebalanced” to drive growth and competitiveness.
David Postings, chief executive of industry trade body UK Finance said: “I strongly welcome her support for the sector.”
Ms Reeves’ aim for lighter touch regulation, delivered to the great and good of the City, comes with Labour’s number one priority to grow the economy in order to boost public spending and improve people’s living standards. But her recent Budget, which saw a number of tax raids on business, has drawn widespread criticism.
Another key measure to drive growth announced last night was reform of the pension system with the aim of unleashing up to £80billion of investment. They include speeding-up pooling of the near £400billion in local authority pension schemes into eight “megafunds”, whose firepower could be more easily deployed for infrastructure spending, from energy projects through to housing.
Louise Hellem, chief economist at business lobby group the CBI, said: “The UK has the second largest pool of pensions assets in the world so finding ways to reorient them towards long-term investment in businesses and infrastructure could drive economic prosperity.”
Amanda Blanc, chief executive at financial giant Aviva, said: “This is just what we need. Rebalancing regulation to be pro-growth will be a real boost to competitiveness, spur more investment in the UK and deliver better value for customers. Let’s get moving quickly on this crucial agenda.”
But independent pension expert John Ralfe warned the shake-up could expose pension savers to greater risk, adding; “If it goes wrong, they suffer.”
Rocio Concha, director of policy and advocacy at consumer group Which?, criticised another announcement by Ms Reeves, to review the Financial Ombudsman Service after what she called "lobbying by the industry". She added: "For its financial regulation plans to succeed, the government must look beyond the boardrooms of the City of London and listen to millions of consumers who have been struggling through a painful cost of living crisis. The Chancellor must ensure they are not further exposed to poor treatment at the hands of the financial sector."
It was precisely this sort of stand-off regulation that led banks to overreach and which caused the crash in 2008 in the first place, plunging us into a recession that we still haven't fully recovered from. What could possibly have led Reeves to believe that anything will be different this time?
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