Bank executives fear that tough regulation is harming the UK’s international competitiveness, according to a poll published by Interim Partners this week.
Almost two-thirds (65 per cent) of the senior executives working in the industry polled, believe that many of the rules and regulations introduced since the financial crisis are negatively affecting the UK’s position as global financial centre and 50 per cent of executives said that new pay rules will harm competitiveness.
City A.M reports that the new pay rules, which are due to come into force in 2016 and could mean that banker bonus payments will be deferred for several years, have been welcomed by the British Bankers’ Association (BBA) and in a move which FCA chief executive Martin Wheatley says “is a crucial step to rebuild public trust in financial services, and allows firms and regulators to build long term decision making and effective risk management into people's pay packets."
Final rules on remuneration in the UK financial services sector were met by criticism from banking executives when they were announced last month, and the biggest concerns have come over the requirement for regulators to authorise business plans, which City AM reports has the biggest cost impact for the lowest return for 43 per cent of executives polled.
Angela Hickmore, a partner at Interim Partners said: “Remuneration in UK banks is now more highly regulated than in any other major economy. While the financial crisis and subsequent scandals have increased the regulatory burden in other jurisdictions, senior executives in the UK are feeling more pressure than their counterparts anywhere else in the world.”
Interim Partners says that the requirement for the FCA and other regulators to authorise new business plans is hindering new entrants coming into the market and slowing banks down in their attempts to move into new markets. The firm also say that the FCA’s initiative ‘Project Innovate’ is helping to readdress the balance, however point out that its scope is limited.
“There’s a real concern among senior executives that we have now reached a point where these stringent controls are starting to put the banking sector in particular, and UK plc as a whole, at a significant disadvantage on international terrain, That level of regulation cannot come without a cost,” said Hickmore.