Post-Brexit ‘Big Bang’ reform of UK financial sector a ‘damp squib’, say lawmakers

Britain’s “big promises” to boost the financial sector’s post-Brexit global competitiveness have been a “damp squib”, with many of the changes yet to be implemented and none so far having a substantial impact, lawmakers said in a report on Friday.

A year ago, Finance Minister Jeremy Hunt set out his “Edinburgh Reforms” to improve the City’s attraction to global investors, made easier now that Britain, and not the European Union, writes the rules for banks, insurers and asset managers.

Pressure to ease rules mounted after UK chip designer Arm Holdings chose to list in New York in September.

Changes such as easing London Stock Exchange listing rules were trailed as “Big Bang 2.0”, a reference to landmark deregulation in the 1980s that helped to turn the City into a global force in finance.

Since Brexit, London faces competition from EU centres, with Amsterdam overtaking the UK capital to become Europe’s biggest share trading centre and the EU adopting many of the same reforms to markets outlined by Hunt.

“We welcome many of the changes as logical and sensible measures. We do, though, question the validity of claims that welcoming consultations, establishing reviews or publishing documents should be considered reforms,” said Harriett Baldwin, chair of parliament’s Treasury Select Committee, which wrote the report.

“The Edinburgh Reforms were given considerable fanfare last December but, 12 months on, the lack of progress or economic impact has left them feeling like a damp squib.”

Separately, City minister Bim Afolami said the government has delivered 22 of the 31 Edinburgh Reforms, with plans in place to deliver on the last nine.

Regulators on Friday would propose improvements to consumer access to financial advice, he said.

“Already companies worldwide are taking note of the UK’s approach, and we will continue to deliver on our reforms as we make the UK the best place in the world to create and grow a business,” Afolami said in a statement.

The report found that six already “delivered” actions are not yet complete, and a further six only involved publishing a document or welcoming a public consultation. None would have a substantial impact on the economy.

Implementing changes is taking too long, often stalled at the finance ministry, lawmakers said, adding that reforms that make the most difference should now be prioritised.