UK FINANCE PUBLISHES RESPONSE TO TREASURY CALL FOR EVIDENCE ON REGULATORY COORDINATION

UK Finance has today published its response to HM Treasury's July 2019 call for evidence on regulatory coordination, warning that simultaneous initiatives from different regulators are increasing operational risk for banks and other financial institutions (Financial Times, £, p2). The response argues that the development of the UK's regulatory framework for financial services has resulted in multiple public-sector bodies regulating banking and finance firms in ways that frequently overlap. Effective strategic alignment and coordination between these multiple bodies is vital in ensuring financial stability and maximising benefits to consumers and SMEs.

Stephen Jones, Chief Executive of UK Finance, commented: ?The scale of firms? collective interactions with these bodies is extensive, and uncoordinated regulatory change mandated by these bodies presents increasing operational risk within regulated firms and accounts for a significant proportion of investment budgets, crowding out funds that might otherwise be available for innovation and growth. In light of this, and drawing on existing best regulatory practice, we believe the government should set out a clear strategy and policy statement providing context and guidance about priorities and desired outcomes over the medium term in the banking and finance sector. Regulators should also collaborate on a shared business plan setting out upcoming issues that cut across their individual responsibilities and overseen by a coordinating authority able to ensure that the pipeline of change initiatives is delivered safely.?

CENTRAL BANKS TO ISSUE £1 TRILLION IN QUANTITATIVE EASING IN 2021

The Federal Reserve, the Bank of Japan and the European Central Bank are expected to buy almost £500 billion of debt this year and close to £1 trillion by the end of 2021, according to estimates by Nomura (Telegraph £, B1). The return to quantitative easing by the three leading central banks is aimed at stimulating the global economy by aiding bank lending, lowering long-term interest rates and pushing investors out of safer bonds into riskier assets.

The Telegraph reports that policy at the Bank of England, including quantitative easing, has been put on hold amid the high levels of uncertainty. Meanwhile, City AM (p15) reports on the major issues Andrew Bailey will face when he takes over as Bank of England governor in March, including Brexit, climate change and a potential economic downturn.

NEWS IN BRIEF

The share of mortgages at a loan-to-value ratio of above 90 per cent rose to 5.9 per cent in the third quarter of 2019, the highest level since the fourth quarter of 2008, according to figures published by the Bank of England (Sunday Times, B2, £).

Business secretary Andrea Leadsom has described executive pay as ?eye-watering?, after figures published by the High Pay Centre revealed the average chief executive at a FTSE 100 company earns 117 times more than a typical UK worker (The Times, £, p37).

The number of publicly-listed companies opting to leave the London Stock Exchange and become private firms increased by 40 per cent last year, according to analysis by the law firm Pinsent Masons (The Guardian, p41).

Sales of new cars fell to 2.3 million in 2019, down 70,000 from the previous year, according to figures published today by the Society of Motor Manufacturers and Traders (Telegraph, £, B1).

WHAT THE COMMENTATORS SAY

Roger Bootle, chairman of Capital Economics, argues in the Telegraph (£, p2) that a moderate real-terms fall in house prices would benefit the UK economy. He suggests that the base rate is likely to be higher over the next decade as fiscal policy is loosened, leading to significantly higher mortgage rates. Mr Bootle concludes that the government should seek to balance these higher rates with an increase in the supply of housing, rising average incomes and measures to reduce or abolish stamp duty.

LATEST BLOGS

In our latest blog post, Stephen Pegge, our Managing Director of Commercial Finance, reflects on the year ahead for UK businesses and their working capital requirements.  

LATEST VIDEOS

Katy Worobec, Managing Director of Economic Crime at UK Finance, looks ahead to February's Economic Crime Congress.