Rachel Reeves plans to reduce financial regulations, arguing current rules inhibit business. However, prominent figures warn that loosening controls could heighten risks in the banking sector. Sir John Vickers cautioned against undermining ringfencing, a crucial post-2008 reform designed to protect consumers. Lord Turner highlighted the potential costs of eroding banking regulations, emphasizing the need for caution. Lord Tyrie expressed concerns about scrapping measures after significant financial investments in risk separation. Overall, major concerns have been raised about the impact of relaxing existing bank regulations on financial stability and economic health.
Rachel Reeves has been warned by City grandees that her plan to slash financial red tape could have little benefit for British households while increasing risks in the banking industry.
Lord Turner said: The costs of getting it wrong far outweigh the gains from loosening the requirements and allowing riskier activity by banks.
Sir John Vickers warned that a wholesale retreat from the reform would be a very bad idea, stressing the importance of maintaining banking regulations to prevent financial crises.
Lord Tyrie cautioned that it would be imprudent to scrap ringfencing after banks had invested huge sums in separating retail banking from their riskier activities.
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