Policymakers are changing how the City of London is regulated to ensure it remains attractive as a major financial centre post-Brexit, in an approach that risks pitting competitiveness against consumer interest.

Proposals to make international competitiveness a formal goal of regulators have been brought forward by HM Treasury, part of a number of reviews of the UK’s regulatory framework to boost the City’s global competitiveness post-departure from common EU rules.

Regulation is seen as a key battleground between the City and its nearest rival, New York.

While senior people in finance preferred London’s regulatory regime, in Duff & Phelps’s annual survey last year, the US financial capital was voted the world’s most important money hub, with 60% of senior decision-makers globally naming it as the top financial centre, as opposed to the City’s 31%.

“Brexit has inflicted permanent damage on the City, which has an exaggerated view of its global importance, and where many more jobs will be lost to digitalisation,” says Alastair Winter, founder of Argyll Europe, which has advised on developments in global markets for the last 30 years. 

But attempts to make regulation more light-touch to give London a competitive edge and be seen as more attractive to new listings and headquarters, may make the City “far too willing to welcome money launderers and even embezzlers”, warns Winter.

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