The Treasury Committee is disappointed at the limited impact of
the Government’s flagship financial services reform programme
which was launched on 9 December 2022.
Speaking almost 12 months ago to the day, the Chancellor of the
Exchequer set out his plan to reform UK financial services rules
following the UK’s departure from the European Union and after
systemic changes were introduced related to the 2008 economic
crash. As part of the launch, the Treasury published a list of 31
strands of work which would be taken forward. These were named
the Edinburgh Reforms.
In advance of the Treasury Committee's report, the Government
sent a progress update on the implementation of the changes. In
its submission to the Committee, the Treasury said it had
completed 21 of the 31 reforms in the first year.
Analysis by the Treasury Committee finds six of the
actions marked as ‘delivered’ by the Government are not yet
complete. A further six measures should not be considered
as reforms as they relate to actions such as publishing a
document or welcoming a consultation, the Committee
says.
For those which could legitimately be labelled as reforms, the
Committee are sceptical as to the value of some changes – giving
the example of a planned reform to the Investment Manager
Exemption which is deemed to have no economic
impact.
In its report, the Committee noted the big promises employed at
the launch of the Edinburgh Reforms in December 2022. MPs
from the cross-party group challenge this narrative by arguing
that a number of the announced measures amount to preparatory
work rather than outright reforms and should be considered as
such.
The Committee said the time taken between the Treasury announcing
a policy objective and the implementation of changes to rules is
too long. Even once consultations end, the next stage of the
process often stalls with Treasury responses with the next
steps taking too much time.
The Committee called on the Government to prioritise reforms that
will make the most difference to the UK's economic growth, as
well as those that prevent harm to consumers and
businesses.
Chair of the Treasury Committee, ,
said:
“More than a decade after the financial crash and six years after
the UK voted to leave the European Union, the Treasury was
absolutely right to look at updating regulation of the financial
services sector and identifying rules which needed to be reformed
or removed to encourage growth in this important economic
sector.
“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.
“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.”
