Lessons from the Big Bang anniversary

As the UK marks the 40th anniversary of the Big Bang reforms, the financial sector reflects on lessons learned from 1986. Leonard Ng, head of the UK/EU Financial Services Regulatory group at Sidley, emphasises that the original reforms were less about deregulation and more about fostering competition and global integration. He states that "the City has built on that foundation to become a leading hub for cross-border banking, investment management, insurance and fintech."

Ng highlights the importance of adaptability for the UK financial services industry, cautioning that "the global financial crisis also demonstrated that competitiveness cannot come at the expense of financial stability and market integrity." Trust is paramount, and he argues that the challenge lies in recapturing the ambition of the original Big Bang while avoiding previous mistakes. In the context of post-Brexit realities, he asserts that the UK must actively attract international firms and investors to maintain its global standing.

He further addresses the critical role of the regulatory environment in promoting growth. Ng notes that "international financial institutions and investors value a regulatory environment that is predictable, proportionate, credible and responsive to innovation." He urges that the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) must turn their objectives into actionable regulatory changes. This includes striving for simpler rules, expedited authorisations, and focused supervision on substantive risks rather than formulaic compliance.

The ongoing regulatory reform agenda plays a crucial role in ensuring the UK remains the top choice for financial services. Ng points out that the Leeds Reforms and the Growth and Competitiveness Strategy aim for the UK to become the number one destination for financial services by 2035. He highlights actions already underway, such as the FCA's consultations on reforms in the funds industry that aim to enhance competitiveness and reduce burdens.

The initiatives also focus on pragmatism in running financial firms. For instance, the removal of the statutory pre-approval requirement for most Senior Manager roles and the reduction of authorisation timelines demonstrate a shift towards a more efficient regulatory framework. Ng expresses the need for a regulatory approach that embraces emerging technologies like AI and digital assets while benchmarking against major jurisdictions. He concludes that "the next Big Bang should be about regulatory efficiency, innovation and international competitiveness."