<div style="text-align: justify; "><b style="font-size: 1rem;">The government has announced what it describes as one of the biggest overhauls of financial regulation for more than three decades.</b><br></div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">It says the package of more than 30 reforms will "cut red tape" and "turbocharge growth".</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Rules that forced banks to legally separate retail banking from riskier investment operations will be reviewed.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Those were introduced after the 2008 financial crisis when some banks faced collapse.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The package of changes, the "Edinburgh Reforms", is being presented as an example of post-Brexit freedom to tailor regulation specifically to the needs and strengths of the UK economy.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">However, critics say it risks forgetting the lessons of the financial crisis.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Between 2007 and 2009 the then-Labour government spent £137bn of public money to bail out banks.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Overall, taxpayers have lost £36.4bn on those bailouts, according to the latest estimate from independent forecaster the Office for Budget Responsibility.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The plans to ease regulations on financial services are being described as another "Big Bang" - a reference to the deregulation of financial services by Margaret Thatcher's government in 1986.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The government has already announced it will scrap a cap on bankers' bonuses and allow insurance companies to invest in long-term assets such as housing and windfarms to boost investment and help its levelling up agenda.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Rules governing how senior finance executives are hired, monitored and sanctioned will be overhauled.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">There will also be new rules around bundling investments together into tradeable units - a process called securitisation.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Chancellor Jeremy Hunt said the changes would secure "the UK's status as one of the most open, dynamic and competitive financial services hubs in the world".</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The reforms "seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses".</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Mr Hunt met bosses of the UK's largest financial services in Edinburgh on Friday to discuss the reforms.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">While in Edinburgh he was asked whether the reforms risked sowing the seeds of the next financial crash.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">He said: "We have learned the lessons of that crash, we put in place some very important guardrails which will remain, but the banks have become much healthier financially since 2008."</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">'Race to the bottom'</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">However, Labour's shadow City minister Tulip Siddiq said the reforms would bring more risk.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">"That this comes after the Tories crashed our economy is beyond misguided," adding that the reforms were part of a "race to the bottom".</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Green charity the Finance Innovation Lab said the government "is taking major risks with the stability of the economy".</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">"Weakening the essential protections that were put in place after the global financial crisis is an incredibly dangerous move - they help keep the system stable and our money safe," said its chief executive Jesse Griffiths.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">But Chris Hayward, policy chairman at the City of London Corporation, said the reforms would not weaken standards.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">"It's a chance to actually grow our economy and I think we should be very excited about it," he said.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">After the financial crisis of 2008, when the government had to spend billions supporting the UK banking system, a new regime was brought in to increase the personal accountability of senior risk-taking staff.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">It allowed for fines, bans and even custodial sentences, although there have been very few examples of enforcement.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">But City insiders say a major disadvantage it imposes is the lengthy process of getting the movement of senior staff to the UK approved by the regulator - making London less attractive to foreign firms.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">After the financial crisis, large banks were forced to separate or "ring fence" their domestic banking operations - mortgages and loans for example - from their investment banking operations, which expose their own cash to market volatility and were deemed riskier.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The cost of having two separate shock-absorbing cushions of spare money was seen by some as placing extra costs on the sector.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Most of the big banks have spent billions on this ring fencing and are not calling for its reversal.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The reforms of ring fencing are aimed at mid-size banks such as Virgin Money and TSB.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The government also re-announced more freedom for the pensions and insurance industry to invest in longer term, illiquid assets - those that are hard to sell quickly such as social housing, windfarms, and nuclear - which the government will say helps their levelling up ambitions.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">It is worth noting that although this will be billed as a Brexit freedom, the EU is undertaking similar reforms.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">There was a nod to developing the UK as a centre for crypto assets, but with some caveats given the recent bloodbath after the demise of the cryptocurrency exchange FTX.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Most financial industry leaders say they are crypto curious but do not feel the need to be first on this. "Let the shipwrecks of others be your seamarks," said one.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">'Jurassic Park of companies'</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">London's position as the pre-eminent European financial centre has been dented in recent years.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">The UK's capital city briefly lost its long-time crown of most valuable European stock market to Paris before gains in the pound pushed it narrowly back ahead, while Amsterdam took the title of busiest European share dealing centre.</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">Leading hedge fund manager Sir Paul Marshall of Marshall Wace recently described the London financial markets as a "Jurassic Park" of old-fashioned companies and investors, and it has struggled to attract the world's fastest growing companies to list on UK exchanges, often losing out to New York, Shanghai or even Amsterdam. BBC</div><div style="text-align: justify; "><br></div><div style="text-align: justify; ">bnbd24/kh</div>