Yahoo Finance Hunt faces new clash with Andrew Bailey over bank rules
Jeremy Hunt is poised for a new clash with Bank of England Governor Andrew Bailey after the Chancellor refused to rule out watering down post-financial crisis banking rules.
Mr Hunt said it was the “right time to review” so-called ring fencing rules as part of efforts to boost competitiveness in the City.
Ring-fencing rules were introduced after 2008 to reduce the risk of trading losses at investment banks hitting ordinary customers of high street banks.
The guidelines force large banks to separate their retail operations from their investment banks.
Mr Hunt has been considering relaxing the rules as part of his post-Brexit “Big Bang 2.0” regulatory overhaul of financial services.
The Chancellor told the Treasury Select Committee on Wednesday: “We do think that 15 years after the financial crisis, it's the right time to review the ring-fencing regime.
“But we've also been very clear that we will not unlearn the lessons of the financial crisis in 2008.”
Mr Hunt said the Treasury would bring forward its ring-fencing plans “shortly”.
The Chancellor's continued commitment to reform puts him on a collision course with the Bank of England.
Senior officials have warned against significantly weakening the regulations, citing recent turmoil in the banking system as an example of why tough safeguards are required.
On Wednesday, the Bank called for tougher regulation across the financial sector, warning there “remain vulnerabilities” in pockets of the City such as pension companies, money market funds and hedge funds.
The Bank’s Financial Policy Committee singled out pension funds holding the kind of toxic products that blew up in the wake of Liz Truss’s mini-Budget as an issue. The committee called for tougher rules governing liability driven investment schemes to prevent another market crisis.
Mr Hunt is pushing ahead with plans to water down ring-fencing rules in an effort to boost the City, amid fears that London is losing its international competitiveness.
Separately, the boss of the City watchdog pledged to review London's listing rules once again in a bid to make the Square Mile more competitive and prevent more companies fleeing to New York.
Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), said the regulator will consult on replacing the current standard and premium listing segments in favour of a simpler system with only one set of requirements.
Mr Rathi said this could lead to the removal of compulsory shareholder votes on large transactions and related party transactions, which played a role in tech darling Arm snubbing London for the US.
He said: "Rather than simply lamenting these decisions or insisting that a few regulatory levers would change the outcomes, it is important to recognise there has not until now been a fundamental discussion about the entire ecosystem.
"We can see the value in allowing experienced investors the flexibility to form their own judgement in making investment decisions based on issuers’ disclosures and rely on their considerable negotiating power."
