Member Article

Steve Williams thoughts on finance for 2012

The Financial Services Sector in the UK in in a state of flux. The damage done by the financial crisis and problems in the Eurozone continue to affect British businesses, and now the Prime Minister’s decision to distance the UK from efforts to save the euro could have further damaging effects.

Steve Williams, financial services partner at Deloitte has been speaking to Bdaily about the impending changes 2012 will bring for the UK banking industry, and what businesses should be doing to help themselves in a troubled climate.

“It will be hard for businesses to formulate a mid-term strategy going forward, and as they try to get to grips with new systems and regulations they may find it difficult to look forward with confidence,” he said, commenting on recommendations made by the UK Independent Commission on Banking in September.

Changes include ring-fencing for banks’ retail operations, higher capital to back ring fenced business and additional buffers of contingent capital to help achieve orderly resolution.

“These regulatory changes could also affect directors in the long term, as many will be focussed on the way they conduct business, rather than on innovation or customer service.”

David Cameron’s decision to veto the European fiscal pact was an intriguing one for Steve, and he and others working within the financial sector are now waiting with great anticipation to see how this will unfold.

“It was interesting that David Cameron chose to make a dramatic stand to protect London Financial Services,” he continued. “It was also rather brave, as regulation is driven by Europe, and we now run the risk of losing the ability to influence future change.”

“He has made a calculated judgement, and in the short term he has protected the sector from regulatory change, but it is possible that this could open up greater medium term risks.”

Next year will also see the implementation of the provisions of the Retail Distribution Review, which is set to have a serious impact on investment managers.

“There have previously been serious concerns around the way intermediaries give out advice, especially as many are believed to be influenced by commission rather than what is the best option for their client,” Steve explains. “The changes will make the system more transparent, although we could now see less people willing to pay for advice, and instead looking towards other sources for help.”.

Looking forward, 2012 looks uncertain, but Steve is encouraging businesspeople in the region not to be too perturbed by recent events.

“Within the region many are concerned about macro-issues which could affect them, including the resilience of markets and the future of the euro,” he concludes.

“UK PLC is reliant on the financial services sector as their main source of income, but if they are not able to be innovative, it is now up to other businesses to step in and fill the innovation gap.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .