Bearing the brunt
Despite Government plans to slash the cost of regulation, red tape has cost British businesses an extra £3.1bn over the course of this Parliament - with financial services firms footing a large chunk of the bill, reports City A.M.com.
The figure is from a
new report from think tank Reform, which found that although deregulation has saved firms £1.2bn, new red tape has cost them £4.3bn.
Tape measure
£3.1bn
How much extra red tape has cost British business over the course of this UK Parliament
£304m
The biggest saving from deregulation, from audit and financial reporting costs
1,497
The total number of laws that came out of the EU last year
47%
The percentage of financial services professionals who feel recent regulation has made little or no impact on financial stability
Sources: Reform, Thomson Reuters, Kinetic Partners
The report also found that the auto enrolment pensions changes have cost £2.7bn, while the EU's Alternative Investment Fund Managers' Directive has cost £1.2bn. "By contrast, the biggest saving from deregulation was £304m from audit and financial reporting changes," wrote City A.M.com's Tim Wallace.
European regulation has added to the red tape, with Thomson Reuters reporting a 13% rise in the number of EU laws in 2013, compared with 2012.
"The City has been rocked by a series of rules directed at finance, including the bank bonus cap and the attempts to create a financial transactions tax," noted Wallace.
The Department for Business, Innovation & Skills disputes the Reform report, arguing that the Government's promises on red tape related only to UK rules and not EU regulation, adds Wallace.
City A.M.com article
"Little or no impact"
Much of the regulation that has contributed to the UK's rising pile of red tape could be in vain, according to a
survey by financial consultancy Kinetic Partners.
Nearly half of professionals working in financial services feel recent regulation has made little or no impact on financial stability, found the survey.
Only 2% of the 283 professionals working in banking, asset management and private funds surveyed expressed confidence that regulations have fully addressed risks of another crash, reports Wealth Manager.
"More needs to be done to build stability in financial services and ensure the system is resilient in future," commented Julian Korek, Chief Executive of Kinetic Partners. "While attitudes to regulation have softened over the past two years, it appears that confidence is limited among financial services firms that the lessons of the crisis have really been learned."
He added that although the major regulatory bodies have been very clear about future areas of focus and concern, "the fact that so many still think there is potential for another crash is worrying".
Wealth Manager story
Less regulation, more education
Drilling down deeper into the survey, Hedgeweek reports that fewer than one in ten respondents believed that more fines on firms or individuals would strengthen accountability and rebuild trust in the industry, and just 1% favoured new regulation.
Instead, greater transparency in governance and management functions, better use of existing regulations, and improvements in public education about the financial world were seen by many as the keys to accomplishing this goal.
Hedgeweek quotes AnnMarie Croswell, Partner within Kinetic Partners' Regulatory Compliance team in Hong Kong. "Regulators alone cannot rebuild trust and ensure stability in financial services," said Crosswell.
She emphasised that while politicians and governments have a responsibility to improve levels of financial education in their jurisdictions, "it is clear firms also have an important role here when it comes in winning back public confidence in the sector and ensuring transparency in their operations and governance to maintain it".
Hedgeweek piece
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