UK 'loses out' from being too keen to follow EU rules

BRITAIN'S habit of sticking to the rules is leaving it exposed to European rivals who take longer to adopt EU financial regulations, a City figure claims.

Chris Cummings, new chief executive at TheCityUK, the leading British financial services promotion group, said the UK's financial services sector was losing out from consistently introducing new EU regulations faster and to a higher standard than other countries.

"That's not a danger, it's a reality," he said. "It's a sophisticated market. Our rivals look at how we do things, but instead of trying to emulate us as best practice they seek to not go as far or as fast as we do to gain an advantage."

He told Scotland on Sunday of his concerns ahead of a high-level meeting with top Scottish financial business figures next month.

Cummings is making his first official visit to Scotland since being appointed last autumn. His concerns are understood to be shared by Scottish business figures attending the private seminar at Lloyds' Scottish HQ at The Mound on 14 March.

They will include Archie Kane, Lloyds' group executive director for insurance and the board member responsible for Scotland; Mark Tennant, chairman of Scottish Financial Enterprise; Standard Life's chairman Gerry Grimstone; and Colin Grassie, chief executive of Deutsche Bank UK.

Cummings cited "gold plating" examples, including the EU's Insurance Mediation Directive being installed by the UK in 2003 and by Germany in 2008.

He said the Financial Services Authority applied the new remuneration code from Brussels to more than 2,000 firms, contrasting with the same regulations affecting fewer than 20 firms in France.

Britain also introduced Mifid (the controversial markets in financial instruments directive that hardened up regulation of derivatives trading) on schedule - one of only three member EU states to do so.

"Our members north and south of the Border struggle to understand why we make ourselves less competitive than we have to," Cummings said.

Critics of varying standards of implementation of new EU rules claim British regulators are inclined to add a City of London-standard "UK finish".

One source said: "By contrast, other member states employ a sort of 'intelligent copy out' of new regulations.The current debate around the level of capital banks must hold shows that the UK authorities are already saying that UK-based institutions must hold higher levels than their European or international competitors."

Cummings, who most recently spent five years as director general of the Association of Independent Financial Advisors, said Britain also risked foreign financial firms quitting these shores due to various crackdowns.

He said taxes on non-domiciles were introduced without consultation, and there was still strong debate about the introduction of the 50 per cent rate of tax.

"It seems sometimes as if we are doing our best in Britain to undermine business regulation," Cummings added. "We had a pro-business regulation system, but we have gone 180 degrees in the last two years and abdicated to Europe."

The boss of TheCityUK (the former International Financial Services London) said British negotiators needed to be increasingly canny about advancing the British financial services' cause in Brussels.

"With nations with one vote over there we have to be better at building allies," he said. "The French, for instance, are past masters at this game."