Bailey warns against ripping up City rulebook in Edinburgh reforms

BANK OF ENGLAND Governor Andrew Bailey poured cold water on ambitious Government plans to rewrite the financial services rulebook today, warning that the regulatory issues which led in part to the global financial crisis have not gone away.

The government is set to tweak some 30 pieces of regulation which it believes will free the City to be more competitive on a global basis.

That includes changes to EU-era Solvency II regulations, which put limits on long-term investing by pension funds and insurers, as well as changing ring-fencing rules for retail banks.

But yesterday Bailey said he “would…caution that the notion we’re past the financial crisis, and we therefore don’t need the regulations that we had post the financial crisis, I would not go along with that view.”

The Governor appeared to be responding to remarks by City minister Andrew Griffith in an interview with City A.M. last week, when the former Sky exec said the world had “moved on” from the financial crisis.

“Banks have much more capital today, lending practices are much tighter, there’s none of that excess mortgage lending that we saw prior to 2008 and the Bank of England has a resolution regime that means if banks get into difficulty there’s a way out of that,” he said.

Andrew Bailey did say it was right to review the rules.

The so-called Edinburgh Reforms – which had been known as Big Bang 2.0 – are believed by Chancellor Jeremy Hunt and others to be potentially transformative for the country’s vital financial services sector.

The industry is the largest driver of economic growth in the United Kingdom.