An influential City lobby group has called on the next government to create a dedicated champion to review and tackle regulation that drags on the international competitiveness of the UK financial services sector.
UK Finance, a trade body for more than 300 banks, payment companies and other financial firms, issued the recommendation for a new “competitiveness champion” in a wide-ranging “financial services manifesto” ahead of the general election on 4 July.
The group proposed that the champion would be responsible for producing an annual report to parliament on the burden of regulation for financial services, including looking at whether there are regulatory barriers that inhibit growth across all sizes of firms and segments of the market.
It said the move would “enhance” the secondary objective for competitiveness and growth given to the Financial Conduct Authority and Prudential Regulation Authority last year, as the champion would help identify and dismantle “barriers to a thriving sector”.
“The next government needs to take a more pro-growth approach to financial regulation, including fully embedding the regulators’ new secondary objective and holding them to it,” David Postings, chief executive of UK Finance, told City A.M.
“The aim is to review and tackle barriers to a thriving and internationally competitive financial services sector and make the UK an even more attractive place to do business.”
UK Finance also recommended a “holistic review of the regulatory regime for non-systemic firms”, including detailed scrutiny of the impact of capital requirements.
The proposals come as some firms have hit back against what they argue is over-regulation from financial watchdogs that could hurt profitability and competitiveness.
Banks’ profits are expected to take a hit from the implementation of the UK’s final Basel III capital requirements, due next July. Meanwhile, insurers have reportedly warned that new powers handed to regulators as part of the government’s overhaul of the EU’s Solvency II regime could hamper their ability to bolster investment in the economy.
UK Finance added in its manifesto that overall tax rates for financial firms should be brought in line with other financial centres like New York.
The UK’s financial sector contributed record tax receipts of more than £110bn to the Treasury last year, according to PwC.
Opponents to high tax measures argue that they reduce competition in the UK by influencing financial services companies to move to countries with a lower tax burden.
City A.M. approached the Conservative and Labour parties for comment.