Regulation of financial sector 'may hit growth'

City Editor

Thursday 14 June 2012

FINANCE leaders have raised concerns that increasing regulation of the sector could come at the expense of growth, as the industry awaits the Government's White Paper on banking reform, due to be published today.

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TIM SHARP CITY EDITOR

A poll of 700 business leaders in areas including banking, fund management and life insurance, and carried out for the Institute of Chartered Accountants (Icas) found that national regulatory change is their top concern, although global regulation also featured prominently in their top 20 worries.

The latest research by Icas revealed that those working in the financial sector fear a wave of new regulation is increasing costs at a time when many companies are trying to strengthen their balance sheets.Robert Outram, editor of Icas's The CA magazine, said: "With sweeping regulatory changes coming in for banking, financial advisers, hedge funds and the insurance sector, among others, the financial services landscape is going to look very different in just a few years. "It will undoubtedly be a challenging time, but the winners will be those organisations that evolve and adapt to meet those challenges."Some 39% of those polled by Icas predicted that 2012 will prove more difficult for their organisation than last year, against 10% who think there will be an improvement and 46% who anticipate it will remain the same.They are even more bearish about the sector as a whole with just 2% expecting the financial services industry to have an easier time against 50% who think it will be more difficult.Financial services will look "quite different" in 10 years' time, according to 80% of respondents, with a further 11% predicting that the sector will be "very different".The White Paper will set out how the Government plans to implement proposals from the Independent Commission on Banking published last year.Among the key plans are "ring-fencing" banks' retail banks from their other activities such as investment banking.

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Regulation of financial sector 'may hit growth'

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