There can be little optimism that the Edinburgh Reforms, a raft of financial services reforms designed to boost the City’s competitiveness post-Brexit, will make enough of a difference to our regulatory framework to ensure that entrepreneurs and investors believe the London market is a viable proposition.
Yes, we should tear up hundreds of pages of what the Chancellor described as “overbearing” EU legislation. But the Government’s plans risk being too little, too late, at a time when the capital value of the London market in comparison with its competitors is fast diminishing.
The entire system requires an overhaul. Financial services regulation need only cover a few areas.
First, the management of conflicts of interest – admittedly a big field, which will include personal account dealing and guard against insider trading. Possibly this would also include clear identification of those who act as principal, and those who act as agent. Almost every incident in the cut and thrust of markets takes place when a player has not understood, either deliberately or otherwise, where professional loyalties should lie.
Second, the identification of entrepreneurs and investors by stock markets and agents acting for their investment clients. All market participants must be identified to avoid money laundering. And lastly, the need to educate people who invest in stock markets to modify their activities with appropriate risk assessment by acting with caution and recognising “buyer, beware”.
FSMA should be repealed, and the existing regulators disbanded and the aim of new regulation for financial markets could simply be to police conflicts of interest, identify market participants and remind investors to beware. If this were to happen quickly, London still has a small chance of regaining its position as the pre-eminent European financial centre.
Rupert Lowe is Reform UK’s business spokesman
