After the battle over UK membership of the European Union, the next battle is over the direction of financial regulation.
The basic split is on whether it is more important to ensure continued market access to the EU or to slash away EU regulation.
Continued access is the main priority for the big established firms in banking and asset management, mostly from the US or continental Europe, who dominate the industry’s lobbying efforts at present, even if it means accepting much existing EU regulation. Many entrepreneurs, however, want to cut back on what they see as burdensome EU red tape.
Chris Cummings, chief executive of financial lobbying group TheCityUK, said it wanted “a bespoke solution for the UK…that protects our single-market access and makes sure we have supervisory equivalence”.
A source close to the Investment Association, the UK’s principal trade body for fund managers, said its immediate priority was to look at ways of securing managers’ access to European markets in case Brexit results in a complete withdrawal from the single market.
This could be done through a single EU-wide passport so that an authorisation in each county is not necessary. The source added that coming up with a list of items in current EU regulations that are not right for the UK was a job for the longer term.
For ‘Leave’ supporters, many of them financial entrepreneurs who have complained loudly on EU regulation for years, the priority is to return London to the lighter-touch regime that allowed old City firms to flourish.
Private equity veteran Jon Moulton said a group was already taking shape in the City’s buyout industry to attack EU red tape.
“Creating a good lively and attractive and sensible regulatory regime in London is a big job and it’s an important job,” he said. “Several people have already been in touch with me this morning [June 24] about that very subject, so I’m sure there will be some sort of group forming to take that forward.”
Some entrepreneurs fancy a dual regime such as that in Jersey. The Channel island has much lighter regulation than the EU, but firms that want access to European markets can opt for a higher level of regulation.
Dominic Johnson, chief executive of Somerset Capital Management, and chairman of lobby group New City Initiative, said: “It would be ideal to have a dual funds regime in the same way as Jersey; this would be perfect. This would allow companies to participate in the EU market if they wanted to.”
Others argued that the City had the clout to get the EU authorities to grant “equivalence” status to new UK rules even if they are a lighter touch in many areas.
Truell said: “London is the pre-eminent financial centre in Europe. We need to be more self-confident. We should say, if you want to trade with us, these are our rules – instead of worrying about access to the EU market.”