The Government launched last week its Red Tape Challenge with no mention of financial services regulation.
The Cabinet Office is publishing details of regulations affecting a wide variety of sectors and industries from retail to hospitality to construction. And they’re also publishing the general regulations that cut across all sectors – from rules on equality to those on employment. Businesses are invited to point out “pointless or outdated rules”, with a commitment that Ministers will, within three months, work out which regulations they want to keep and why. The default presumption will be that burdensome regulations will go. The Government says that if Ministers want to keep such regulations, they will have to make a very good case for them to stay.
But there’s a striking omission from the list of sectors whose regulations are covered by the review: there’s no mention of the financial services industry.
We commented in our most recent Financial Services Update (FSU) how much of the rules are now derived from EU Directives. Could this be the reason for the omission? Or does the Government believe none of the many regulations affecting the insurance, banking and financial services sectors are pointless or outdated?
The Red Tape Challenge website’s FAQs are telling: “Will you scrap EU regulations? – The UK government cannot scrap EU regulations, but we do recognise the burden they impose. That is why we are giving the public an opportunity to comment on how EU legislation has been implemented in the UK on this website. We will then review any instances of ‘gold-plating’ – where the UK has gone beyond the minimum required by the EU legislation.
“What are you doing to address the burdens of EU regulations? – We are working with other EU Member States to try to make sure new burdens placed on business are off-set by savings elsewhere. We are pushing the European Commission to start by publishing the cost of planned regulations and setting a target to reduce the overall burden of EU regulation. We are also working to try and ensure that the European Commission Strengthens the Small and Medium Enterprise test so that businesses of fewer than 10 employees are exempted from new European legislation“.
Talk of reviewing gold-plating and an SME test would be music to the ears of financial services firms if only the Government or the FSA were listening.