Lloyd’s chairman warns over-regulation will damage City
Lord Peter Levene, chairman of Lloyd's, warned that over-regulation could “end up doing irreparable damage to one of the strongest sectors of our economy," at the Lloyd’s annual dinner the FT reports.
"It is nonsensical for politicians and others to suggest that the UK financial sector is 'too big' for the UK economy when much of the business conducted in the City is international, servicing international clients," he told an audience of City leaders and ambassadors in Merchant Taylors' Hall.
"This is the one industry where we are world beaters . . . Can you imagine the French, German or Swiss governments questioning the importance of the competitiveness of their wine, automotive and pharmaceutical industries? No."
We’re not all merchant bankers
"People keep talking about the problems of financial services, as if we all do the same job, as if everyone is an accursed banker," Lord Levene said. "This is a hugely diverse sector, much of which had nothing to do with the credit crunch and its excesses.
"Let us be careful, and measured, in our remedies, so that we do not damage healthy and vibrant sectors, of which insurance is top of the list."
Blloomberg reported that Levene said bankers have become “hate figures” and financial services have been “demonised” in election campaigns throughout the developed world since the collapse of Lehman Brothers a year ago.
No reason to undermine UK
The crisis “is certainly not a reason for politicians and policy makers to start undermining the U.K. financial sector,” Levene said.
Attempts by the European Union to restrict the behaviour of hedge funds and private equity firms were “pandering to populist outrage or driven by ideological opportunism,” Levene said.
“There can be no going back to the bad old ways,” he said. “But this has been a global, not just a British, phenomenon and it involves only a part of the financial industry.”
London attracts money
The Independent added that Levene said: "Why do corporations, institutions and governments around the world bring their money and their business here? Because we offer something unique – an unrivalled mix of skills, good regulation, a dynamic environment and a proven ability to adapt and evolve. In short, the City is a world-class place to do business."
Attack on FSA’s Lord Turner
The Times said that “although he did not name Lord Turner, Lord Levene’s comments mark a clear attack on the FSA chairman, who caused anger in the City with comments in Prospect magazine last month. Lord Turner, who is playing a central role in a regulatory crackdown on risk-taking and bonuses in the wake of the financial crisis, said the City had grown too big and some banking activities were socially useless’. He floated the idea of levying heavy taxes on banks to curb their activities.”
Repeat of Paris speech
The comments repeat Lord Levene’s speech from the previous night in Paris where he warned that regulators must not punish financial firms for previous indiscretions if that stymies industry’s ability to operate effectively in the future.
“In my mind one thing is clear: this vision must tackle irresponsible risk taking and address the excessive reward culture that lost touch with reality,” said Levene.
But the furore over bankers’ bonuses is ‘essentially a side show’ he argued. “The crucial point is to ensure that risk taking is backed up by capital and careful analysis. It is crucial that regulators remember the importance of proportionality, commerciality and workability,” Levene said.
And the new regime should not see the insurance industry, which emerged from the crisis relatively unscathed, being tarred with the same regulatory brush as banks.
Carry on taking risks
Levene also cautioned against businesses becoming too averse to risk.
“I am not suggesting that anyone in the financial services should become a risk junkie, but nor should we shy away from necessary and well-judged risks. Risk is an essential part of any business,” he said.
“Insurers sell security when they buy risk. And without this exchange, there will be no growth, no innovation.”
