Hunt's banking reforms a 'race to bottom' after Brexit

The architect of banking reforms designed to prevent a repeat of the 2008 financial crash has warned that Jeremy Hunt's relaxation of his rules could "rebound on us very badly".

- ANDREW WOODCOCK

Sir John Vickers said that "chiselling away" at protections in the financial sector could have negative consequences for the whole of society.

His warning came as the chancellor was accused of a "race to the bottom" on regulation in a bid to restore competitiveness lost by the UK financial services industry as a result of Brexit. Prime minister Rishi Sunak said Mr Hunt's package of more than 30 regulatory changes - known as the Edinburgh reforms after they were launched by the chancellor in the Scottish capital - were an example of the UK taking advantage of freedoms gained by leaving the EU.

But Labour said the City had been "sold down the river" by the Conservative government's Brexit deal, which has seen trading volumes in Amsterdam overtake London and Paris challenge for the title of Europe's largest stock market. Mr Hunt's reforms include the loosening of ring-fencing rules to separate risky investment banking from retail operations, as well as a regime introduced to hold bankers directly accountable to issues on their watch.

Mr Hunt has also introduced a new objective for regulators to ensure the "international competitiveness" of the UK economy, alongside existing requirements to promote the safety and soundness of financial institutions. The chancellor denied that he was "unlearning the lessons of 2008".