CBI: 50 Years of Business Innovation | uk Spotlight
the public markets. Because London is a global financial centre it gives customers access to a global pool of liquidity.
“ A healthy economy needs an efficient financial system to help businesses invest and grow”
Since the most recent recession there has been a dramatic decline in the volume of bank
bank rescue package that was used to bail out
abolished the Financial Services Authority and
lending to businesses. While there is major debate
Royal Bank of Scotland and Lloyds Banking
established the Prudential Regulatory Authority
over whether this is due to resistance by banks
Group, which both remain partially state-owned.
to regulate around 1,700 financial firms and the
to lending at affordable rates or lack of demand
A number of smaller banks and building societies
Financial Conduct Authority to regulate conduct
by firms, it is clear that the UK will benefit from
were also taken over.
related to the marketing of financial products.
alternative sources of finance. In its 2013 report,
The scale of the crisis has highlighted the
The European Commission has embarked
Ripe for the Picking, the CBI showed that the
importance of having comprehensive and smart
on a major financial markets reform – the
crisis put the UK on an irreversible path to a “new
financial regulation to deliver financial stability
review of the Markets in Financial Instruments
normal” in financing. Regulatory reform, balance-
and prevent a build-up of risk – while ensuring that
Directive – that the CBI has welcomed. It has also
sheet restructuring and a more realistic pricing
markets operate efficiently. Regulations drawn up
worked on new rules covering a host of activities
of risk, mean that traditional bank debt will no
in the UK, European Union and globally affect
including derivatives, alternative investments,
longer be the right finance for all businesses,
Britain’s banking and financial industry. As CBI
retail investment funds and insurers, and has
all of the time. The report included a clear guide
director-general Richard Lambert said in the
established a European System of Financial
to alternative sources of finance such as peer-
2010 Annual Report: “We have been working with
Supervision. Meanwhile global regulators have
to-peer lending and crowdfunding, supply-chain
our members to develop proposals for the kind
worked on the Basel III regulatory regime for
finance and the retail bond market.
of regulatory reforms that will allow the banks
major banks.
to once again stand on their own two feet.”
There is clearly further to travel down
Reform and regulation
The UK government has implemented wide-
the road to regulatory reform, and financial
The global financial crisis of 2007/08 led to the
ranging reform of the financial services industry.
innovation continues apace. Now the worst of
near collapse of several UK institutions, starting
At its heart was the 2013 decision to establish a
the crisis has passed, the CBI will work with
with the run on Northern Rock. It prompted the
new regulatory framework. This gave the Bank
national and global policymakers to ensure that
government in 2008 to launch a £500 billion
of England responsibility for financial stability
the financial system can provide the lending
and a new financial stability committee to take
consumers and businesses want. It’s something
action to remove or reduce systemic risks. It also
Captain Mainwaring would doubtless applaud.
Opposite: The banking sector is adopting reforms
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