Charles Stanley: No living wills

SIR DAVID Howard, the former Lord Mayor and chairman of stockbroker Charles Stanley, yesterday warned that the Treasury’s proposals to introduce “living wills” for financial firms could cost the sector hundreds of millions of pounds in lost profits.

Howard said the cost of such a move to Charles Stanley would be around £1m, meaning that the sector as a whole could be hit by a bill of hundreds of times that amount.

The Treasury’s proposals would require all financial firms to establish and maintain a detailed due diligence mechanism as part of precautionary provisions for an orderly wind-down of their business in the event of failure.

But Howard argued that the “overwhelming majority” of affected firms, including Charles Stanley, pose negligible systemic risk and therefore should be granted an exemption from the costly procedure. He said his firm is already required to provide the FSA with detailed plans to wind down the business, meaning that the new plans – which include one director having to spent a fifth of his or her time overseeing the due diligence procedures – are superfluous.

“This is just one example of what I regard as almost ridiculous over-regulation of the financial sector, implemented as a knee-jerk reaction to the crisis,” Howard told City A.M..

Charles Stanley yesterday unveiled robust growth in revenue and profits for the year to the end of March. Revenue rose 13 per cent to £115m, while adjusted pre-tax profit leapt 10 per cent to £13.7m.

The firm also reaped the benefits of acquiring boutique Matterley Asset Management last year, with funds under management up 42.2 per cent to £12.8bn over the year.