Partner Bob Penn told delegates at the Future of the Financial System conference in Westminster last week that it is essential for the UK to be on a level playing field with other jurisdictions in terms of financial regulation.
He said: “Wholesale markets can migrate very easily and balance sheets can be moved cross-border relatively easily so there is a level of recognition from the FSA that it has to get this right.
“We are looking at the significant danger of mismatches in regulation. We need to avoid mismatches in substantive regulation and in the timing of implementation. There will be winners and losers in this process and clearly we do not want to be a loser.”
Beachcroft Regulatory Consulting managing director Richard Hobbs says the danger of companies leaving London does exist but that the same dilemma is being played out in other major financial centres, including the US.
Hobbs says: “This concern is being keenly felt everywhere else. It does mean that G20 has to act in unison and must keep to their word, which is a big ask.”
Penn said the regulator’s proposals to make UK branches of foreign banks operate as stand-alone entities will have a real impact on cross-border firms, which will have to comply with increased capital requirements and regulatory burdens.