Deregulatory pressure from Westminster looks set to be a major theme of 2007, with Chancellor Gordon Brown’s high-level group looking at cutting back red tape and the hard-hitting National Audit Office reporting on its review of the FSA.
Cicero Consulting account director Mark Twigg says financial deregulation has already become a major political battleground and, thanks to the Better Regulation agenda, 2007 looks like seeing further examples of the main political parties trying to outdo each other in their attempts to cut back on red tape.
He says: “Coupled with Gordon Brown’s desire to secure his legacy as the light-touch, market-driven – rather than the clunking fist – Chancellor, we are likely to see the FSA put under a considerable strain from Westminster.
“This political pressure will be felt across a lot of the FSA’s activities, with a possible watering down of general insurance regulation, as well as training and competence requirements.”
The Conservatives’ economic competitiveness group, led by the arch-priest of deregulation John Redwood, will report in the summer and is expected to give the FSA a bashing and call for various deregulatory measures, further turning the screw in this area.
With the Tories consolidating their lead in opinion polls, their views on financial services will be taken more seriously by the financial services industry as a potential Government in waiting.
The ongoing pension reform saga will rumble on with consultation over the second White Paper on personal accounts and a work and pensions select committee inquiry into the Government’s proposals.
The committee hopes to rush its report through as soon as possible and the early part of the year should see the arguments over suitability, advice and levelling down thrashed out along with a few new concerns over the amount of existing money which is set to enter the scheme.
We will also see how far the opposition parties will go in their current resistance to elements of the scheme and if a similar consensus to that which has developed over reform of the state pension can be achieved.
The summer’s comprehensive spending review will also spell out future Government commitments in areas such as welfare and pensions.
The year should see Brown’s last Budget as Chancellor and perhaps one last change to spring a surprise U-turn or tax grab on an unsuspecting industry and wider public or maybe a few sweeteners on inheritance tax or stamp duty to boost his popularity before his ascension to the top job.