Keeping things in proportion | Insurance company in UK
The final step in the government’s Future Regulatory Framework (FRF) review, titled âReform Proposals,â was a welcome Christmas present in advance. Now I know that’s not what most of you would have asked for but, as Managing Director of the London Market Group, the importance of this consultation to explore how the UK regulatory framework for financial services should adapting cannot be underestimated. In a post-Brexit world, the FRF is therefore essential to ensure that the UK regulatory framework can facilitate the future growth of our market.
What has been greatly appreciated is that the government has changed its long-established position on an international competitiveness obligation for UK regulators. It’s long been on my Christmas list (and many others) and is now being offered as a secondary statutory goal. But here I’m going to go a little Grinch – that’s not enough. We need competitiveness and growth objectives to bring about a change in the culture and behavior of regulators. This is why our attention now turns to how we can ensure that the duty has the ‘teeth’ necessary to be effective and to make a difference in the UK’s competitive position.
To change the culture we need a ‘welcome mat’, and we need active government and treasury support not only for new companies wishing to invest in the UK, but also for established players. looking to increase their footprint. We also need transparency and accountability – measures that show how regulators behave in relation to their objectives and full accountability to Parliament in relation to those objectives and measures.
According to all good management books, what gets measured gets done. We would like the Treasury – which these reforms are after all – to be very specific in how regulators demonstrate that they really care about competitiveness, and not just lip service. And the good news is we don’t have to reinvent the wheel, other regulators around the world with similar functions produce annual reports and benchmark themselves against others.
The big lump of coal in the FRF was the lack of emphasis on proportionality, with the risks that the UK will continue to have a ‘one size fits all’ approach to how it treats different industries and types of clients. . The FCA’s price review is a classic example. This was a measure designed to help consumers in the home and retail markets – a real problem that needed to be addressed, but is completely unnecessary for corporate clients accessing commercial products. Despite the best of intentions, all of this worsened more costs and burdens on London market brokers and hurt our competitiveness.
So that leaves us with New Year’s resolutions. For LMG, no New Year’s diet is necessary. Instead, I’m working towards the next deadline for contributing to the FRF process in February. We will continue to convey our messages to ministers and parliamentarians, as well as to work with other representative bodies in the city to form a coalition of support. The onus is then on the government to respond in a timely manner, and we will do everything possible to do so.