BRITAIN’S financial sector is becoming over-regulated and the associated costs are putting firms off locating here, according to the Lord Mayor of the City of London.
Fiona Woolf, who was in Edinburgh in her role as ambassador for the UK’s financial and professional services industries, told Scotland on Sunday that the measures introduced in the wake of the banking crisis were proving expensive to implement.
She said: “Banks are regulated in a much more intrusive way than they were before. We are wondering whether they are a bit over-regulated, because the cost of demonstrating compliance will fall on shareholders and customers.”
Adding to the expense is the fact that countries have all set up their own systems of regulation.
Woolf said that not only is that proving costly for the UK’s global banks, but it also puts foreign firms off opening UK offices because it means taking on another regulator.
“We would like the regulation to be more joined up and to trust each other more,” she said. “A streamlined system would reduce costs for everyone.”
For every job a financial firm creates at a new London base, on average it will take on two staff in other UK cities, such as Edinburgh and Glasgow.
Woolf added that the City is often hit by extra legislation because the UK government tacks on its own clauses to missives from Brussels. The Lord Mayor’s office has been working with the Financial Conduct Authority to try to ensure that any new regulations are no more onerous than they need to be.
The Lord Mayor of the City of London represents not only the Square Mile, but also the financial and professional services industries. Edinburgh-born Woolf, a lawyer specialising in energy and infrastructure who built her career at CMS Cameron McKenna, is the second Scot to wear the chain in as many years, but only the second woman since 1189.
She was speaking after a business breakfast at the Royal Scots Club organised by the Institute of Directors (IoD), which sought to discuss ways of increasing the number of women in executive positions. Woolf is using her year in office to try to promote better management practices that will help Britain’s boardrooms to become more diverse.
She said: “The opportunities for British business have never been more delicious or more vast. But if we all come from the same background, where are the new ideas going to come from?”
Woolf said the problem is not unwillingness on the part of business leaders to appoint women and minorities, but unconscious bias and lack of proper talent nurturing at middle management level.
The IoD in Scotland has also been focusing on boardroom diversity in recent years. Its biannual Women onto Boards events, held in March and October, provide senior women with boardroom experience.
David Watt, executive director of the IoD in Scotland, also believes that development, rather than quotas, is the way forward.
“Not only would quotas encourage tokenism, but they would fail to tackle the shortage of women coming through the executive pipeline,” he said. “Developing these professionals and opening up the board recruitment process would be more effective in the long term.”