Committee verdict

MPs say Hunt’s Edinburgh Reforms ‘make no impact’

Jeremy Hunt
Jeremy Hunt: aims to reform regulation

Jeremy Hunt’s “Edinburgh Reforms” which were designed to boost the financial services industry have made no substantial impact, according to a cross-party committee of MPs.

The Chancellor came to Edinburgh a year ago to announce the package of 31 measures, promising they would shake-up regulation and spread the benefits of financial services more evenly across the UK.

They included relaxation of some of the measures introduced after the 2008 banking crisis, such as the rules around ring-fencing operations. He also pledged to tear up EU rules to help secure the UK’s place as the world’s foremost financial centre.

Mr Hunt said the “Edinburgh Reforms” were an “opportunity” to create a UK-specific framework without the restrictions of Brussels mandates.

He argued that businesses and consumers would benefit from the rigorous plan to review, repeal and replace hundreds of pages of EU regulation ranging from disclosure for financial products to prudential rules for banks.

However, in a blow to the government’s ambitions to bolster the competitiveness of Britain’s finance industry, the Commons’ Treasury committee said many of the claims made by Mr Hunt have turned into a “damp squib” with little action.

Many of the initiatives are not reforms “but are more preparatory work for potential reforms in the future and should be treated as such”, said the MPs.

None of the work completed by the government so far “will make a substantial difference to the UK economy”, they concluded.

The Treasury committee said six of the Edinburgh initiatives involved “publishing documents, welcoming a regulatory consultation and establishing reviews or taskforces [and] none of these are in of themselves reforms to the UK’s financial services regulations”.

Harriett Baldwin, the Conservative MP who chairs the committee, said: “The Edinburgh reforms were given considerable fanfare last December, but, 12 months on, the lack of progress or economic impact has left them feeling like a damp squib.”

Mr Hunt has put financial services at the heart of his plan to reinvigorate the economy and turn Britain into a post-Brexit powerhouse. He has also promised to overhaul the pensions industry to encourage investment by retirement funds in British start-ups.

New proposals steered by the Financial Conduct Authority will set out initial proposals to help csh-strapped consumers seeking financial advice.

Treasury minister in Scotland

Bim Afolami at the FS summit in Edinburgh

Defending progress on the Edinburgh Reforms, Economic Secretary to the Treasury, Bim Afolami, who marked the anniversary the announcement with a two-day trip to Scotland, said 22 of the 31 initiatives had been completed.

He said that “over the past year we’ve made significant strides towards creating an environment that supports economic growth, openness and the wellbeing of savers.”

Progress includes legislation which will overhaul the UK’s regulation of prospectuses, the information available to investors when a firm raises capital, and bringing forward secondary legislation to take advantage of the UK’s newfound regulatory freedoms since leaving the EU.

The Treasury said these changes mean the government is taking forward its ambition for the UK to be the world’s most innovative and competitive global financial centre.  

Mr Afolami said: “My number one priority in this role is to deliver on The Edinburgh Reforms. The reforms have shown the UK’s dedication to fostering a sensible, innovative and robust financial landscape – over the past year we’ve made significant strides towards creating an environment that supports economic growth, openness, and the well-being of savers.   

“Already companies worldwide are taking note of the UK’s approach, and we will continue to deliver on our reforms as we make the UK the best place in the world to create and grow a business.” 

The minister held a series of roundtables on asset management and fintech in Edinburgh and visited Morgan Stanley offices in Glasgow. 

Today was also the first Scottish-London FS forum – chaired by the Economic Secretary in Edinburgh.     

The trip was the Economic Secretary’s first trip to Scotland since his appointment. He said: “Edinburgh is a key part of our financial services landscape, and it was really important to me to come and see some of the great work being done here within the first month of my appointment. Scotland is known for its innovation and ingenuity and I’m sure this will be the first of many such visits.”   

Miles Celic, chief executive at TheCityUK, said: “The Edinburgh Reforms – and the subsequent Mansion House Reforms – were a positive signal of the government’s commitment to maintaining the UK’s competitiveness as a leading international financial centre.

“As we progress this important reform agenda, it is critical that government, industry and regulators work together to drive forward the implementation of the reforms and to deliver nationwide economic growth by bolstering the attractiveness of the UK as a place to list, invest, innovate and scale.” 

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