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Denis Sergienko • 2022-12-12

UK Plans the Financial Sector Overhaul to Spur Growth

UK Plans the Financial Sector Overhaul to Spur Growth

The UK government is planning a major overhaul of the entire financial sector. It has officially announced a set of intensive reforms that will change current financial regulations.

They believe that these measures will ensure the long-term growth and competitiveness of the UK’s Financial Services. On the other hand, the opposition states new reforms will give a start for the race to the bottom.

Financial Reforms to Expect

The new package contains 30 reforms. Some of them will provide relaxation for banks that now have to separate their retail operations from investment arms. This measure has once been introduced back in 2008 during the Financial Crisis. This time, it will not apply to banks that are focused mainly on retail.

Additionally, the government will review current rules that refer to the financial executive’s accountability. It means individuals who work in regulated companies can get penalties for poor decision-making, inappropriate workplace culture, and low-level conduct. Also known as the Senior Manager Regime, the measure was introduced in 2016.

The rules for short-selling will also be reviewed as part of the Edinburgh Reforms package. The government will check how companies get listed on stock exchanges. New rules will also be applied to insurers’ balance sheets, trusts, and so on.

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As stated, the government believes the new package will let the United Kingdom remain the nation with one of the most dynamic and competitive financial services.

Race to the Bottom

Representatives of the opposition Labour party say these new reforms are nothing but a race to the bottom. They will deliver more risks to financial stability, as they will make it harder to keep backbenchers under control.

Many still argue about the damaged nation’s financial competitiveness after leaving the EU. London lost billions in derivatives and stocks according to a Reuters report after departing from the European bloc. What’s more, economists and experts warned that Brexit will mainly damage the financial service among all other sectors.

In such situation, it is very important to keep your portfolio well-arranged and properly diversified. Investors should not focus on a single asset. With so many emerging markets, traders can diversify their assets and keep their capital safe from collapse.