In a report published on Monday entitled 'Financial Services: Promoting a Global Champion', the Confederation of British Industry (CBI) suggested that financial services companies are being battered by a tidal wave of regulation which threatens to undermine the sector's contribution to the UK economy.
The CBI report revealed that over the next two years, more than 20 new EU measures covering areas such as international accounting standards, bank capital, consumer credit, and occupational pension funds will be imposed on UK businesses as part of a drive to create a single European market for financial services.
In addition, those firms with US listings will be obliged to comply with the requirements of the Sarbanes-Oxley corporate governance legislation.
Urging a moratorium on new regulations in order to allow UK businesses to catch their breath, CBI Deputy Director-General, John Cridland, observed on Monday that: "The UK financial services industry is one of the best in the world. It's a major contributor to UK employment, output and balance of payments, but that is at risk."
He continued:
"A robust regulatory environment is essential. Internationally it's regarded as one of the strengths of UK financial services. But companies are being battered by the impact of relentless new regulation. It's forcing a dramatic and wasteful diversion of effort away from the daily battle to keep the UK ahead of its competitors. It's vital that companies are given a substantial breathing space and not another onslaught."
The CBI report warned that failure to stem the onslaught of new regulations relating to UK's financial sector could seriously damage its competitiveness, and asked the government to take the lead in promoting the industry in international negotiations rather than simply fighting rear-guard actions to minimise the damage from poor legislation.
It also suggested that greater political support should be offered to the sector, revealing that since 1997 it has faced some 25 reviews, and arguing that the same effort should now be put into championing the industry.
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