UK exaggerates Brexit dividend from City reform says watchdog

According to the chairman of the Conservative Party of a key parliamentary watchdog, the UK government is exaggerating the benefits of the landmark financial reforms and is “dishonest” by describing it as a Brexit dividend.

The landmark reform parcel was announced in Edinburgh last month by Prime Minister Jeremy Hunt, who said many changes were only possible thanks to the “freedoms” afforded by leaving the EU.

“I think it’s a bit dishonest to pack it all into something we can do thanks to Brexit liberties,” said Harriett Baldwin, a senior Tory party member, of the party’s 30-point action plan for new financial industry rules, adding that the overall package was “not big.” as expected.

Baldwin, a 21-year veteran of US banking giant JPMorgan before she turned to politics in 2010, is gourd Chair of the Treasury selection committee on 9 November. Now an MP for West Worcestershire, the 62-year-old’s public service CV includes duties as City minister in David Cameron’s government. , defense procurement and state minister for Africa.

Two of the most important elements of the reform in Edinburgh are changes to hedge regulations that protect retail banks from trading losses and a review of regulation. Senior executives hold executives accountable for their failures. Both were introduced by the UK government in the aftermath of the financial crisis, with no input from Brussels.

Baldwin said the decision to include a bunch of such changes in the package “is a slight change I think.” She added that in any case, the government is not proposing “a lot of changes” to the hedge regime, with the exception of “some smaller companies” who will have an easier time following the rules. proposed new rules.

Initially, the government named the long-awaited package of reforms Big Bang 2, before choosing a more modest name. “I think, looking under the bonnet, it doesn’t look as big as it’s billed for,” Baldwin said. view of industry leaders.

She added that TSC has pushed and will continue to push for the Finance Ministry to come up with a “timetable” for implementing the reforms.

Regulators, who intervened to rescue the UK government’s debt markets from the danger posed by politics, are at least partly responsible for taming some of the country’s more liberal impulses. Ministry of Finance and continued warning against deregulation.

As president of the TSC, Baldwin is responsible for interrogating the performance of the Treasury and financial regulators as they pursue their lengthy summaries amid high inflation and projections. ants Depression.

The committee’s key areas of focus for 2023 include overseeing the rollout of reforms in Edinburgh, holding the Bank of England accountable for inflationary and the consequent cost of living crisis, while pushing ahead with the financial services and markets bill, will strengthen the UK’s post-Brexit financial regulation.

The Commission is also trying to encourage better regulation of new aspects of the financial services sector.

Baldwin, who took over the TSC chair from work and pensions secretary Mel Stride in November, also vowed to “closely look” at the BoE’s efforts to bring inflation “back under control”. , which describes inflated prices as “the worst possible tax you can impose”. on the poor”.

She criticized the BoE for not acting sooner to stem the 20 percent inflation that is estimated to be caused by domestic pressures such as persistently low interest rates, rather than international factors such as higher oil prices. due to Russia’s invasion of Ukraine.

She also heavily criticized the IMF, whose officials have so far refused to appear before the TSC to explain their harshness. criticism on former prime minister Liz Truss’ controversial but short-lived tax cut, an unprecedented intervention that has contributed to a rise in the UK’s borrowing costs.

The tax cuts were canceled when Kwasi Kwarteng, the then prime minister, was abruptly kicked out of office by Truss, of whom he himself also died shortly, ending the UK’s shortest term as prime minister.

“If they didn’t put a lot on the record during the crisis in September and October, I would be less insistent. [on them attending],” Baldwin said. “But I do think that such large public institutions, especially when they are in the habit of giving their unsolicited advice, should when asked for it, they should come and give it. on file.”

In a wide-ranging interview, Baldwin also called on the Financial Conduct Authority, which regulates the sector, to move faster in regulating “buy now pay later” lenders who offers credit for everything from £10 to shoes to consumers but operates almost entirely unattended.

“They reassured us that they would do it. . . they don’t think they’ll do it early next year, that seems to have been pushed back to the end of the year,” she said, adding that faster progress “would be more in line with what parliament want to see”.

The FCA said it would consult on buy-now-pay-later regulation as soon as the government introduces the law.

Baldwin praises the FCA for its efforts so far in crypto, where it has limited powers but has managed to “keep quite a few of these bad guys at a fair distance” from individuals in the UK. .

Harriett Baldwin chairs the first meeting of the Treasury selection committee in November

Harriett Baldwin chairs the first meeting of the Treasury selection committee in November ©

During her first week as chair, she launched a TSC investigation into cryptocurrencies, likening the hype surrounding the industry to the Dutch tulip craze of the 17th century. The commission will release the report. next month, when the government finalizes its plan to impose financial order on the “Wild West”.

When asked about the government’s aspirations for a crypto hub in the United Kingdom, Baldwin said the underlying technology is very useful and that it is not feasible to completely phase out crypto.

“The freedom to let people do silly things with their money may not be something that, with the best will in the world, we can stop people from doing,” she said.


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