Carolyn Fairbairn said the government should scrap the punitive 8 per cent surcharge on banks’ profits, and the City’s twin regulators, the Financial Conduct Authority and the Prudential Regulation Authority, should “really prioritise competitiveness”.
The supertax should be phased out within the next five years, Ms Fairbairn said in an interview with the Financial Times. “It’s time for banks to be taken off the naughty step. This is about sending a signal that a chapter [of crisis] is over,” she said. [...]
She said secondary legislation would probably be needed to change the remit of regulators and include international competitiveness as a priority alongside systemic soundness, consumer protection and the promotion of in-market competition.
The push to tilt the regulatory balance in favour of financial services companies, through what Ms Fairbairn calls “smart regulation” that operates in a happy-medium “Goldilocks zone”, will be controversial. Government and regulators last used competitiveness as a driver of policy in the run-up to the 2008 financial crisis.
“We need really strong regulation,” Ms Fairbairn said. “But we have to be competitive.” [...]
Ms Fairbairn will reinforce her message in a high-profile speech to the Scottish CBI in Glasgow on Thursday. In that address, she will also call on the government to give “an early commitment of its intention to secure reciprocal market access for financial services” as part of its Brexit negotiations with the EU.
“Firms’ contingency planning will run far ahead of negotiations,” she will warn, a reference to the danger that banks, in particular, are already considering moving operations and jobs away from the UK.
Ms Fairbairn is also outspoken about the need to retain and improve access to skilled immigrants, both from Europe and beyond, as a means to boost the City’s global credentials. “If we are to appeal as a financial services hub to the likes of China and India, we need to be able to employ skilled workers from those countries,” she said. “That is getting harder. After three to five years, visa restrictions force them to leave.”
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