The Government will place the needs of Yorkshire’s financial services sector at the front of its mind when it negotiates Britain’s exit from the European Union, Chancellor Philip Hammond said yesterday.
The Chancellor also believes that major banks have undergone a cultural change since the financial crash, which is steering staff away from risky behaviour.
He made the comments as he visited Halifax yesterday to meet senior figures from regional professional and financial services firms. Mr Hammond hosted a private roundtable at Lloyds Banking Group in Halifax and toured the building and chatted to staff.
Speaking afterwards, Mr Hammond said he was visiting Halifax to emphasise that financial services is a UK-wide business.
He said: “We often talk about financial services, and people think we are talking about the City of London.”
He added: “This is an industry that employs 2.2 million people across the UK in financial services centres like Leeds and like Halifax.
“More than 60 per cent of all employees in the sector are based outside London and this is a series of visits to try and get that perspective back into balance, so that as we’re thinking about the future of the financial services business, post-Brexit, (and) how we are going to regulate it; we’ve got a proper focus on the needs of the much bigger domestic UK financial services business sector, and make that sure we don’t just get a London-centric view of the sector.”
Mr Hammond said that a lot had changed in the banking regulatory system since the financial crash of 2008.
He added: “The banks are working very hard to build their small-business customer bases and are very focused on the needs of those customers, which is a positive thing.
“But since 2010, we have had a change in the regulatory structure. We’ve had a change in the culture in the banking industry and with it a change in the way people in the industry are remunerated.
“So, there were a lot of perverse incentives in the remuneration structures pre the crisis, where people were driven to promote risky products and to indulge in risky behaviours because they were rewarded for doing so.
“Remuneration structures have come under the microscope since then and they’ve been re-organised in a way that steers people away from these kind of practices.
“Of course, a lot of institutions paid out billions of pounds of compensation for mis-selling and misleading practices.”
He added: “Financial services businesses serve the regional economy, and their number-one purpose is to support the real economy and businesses and consumers. And as we go into our negotiations with the European Union and think about our financial services industry, post-Brexit, we will have the needs of the regional industry top and foremost in our minds.”
The Chancellor said The Financial Conduct Authority (FCA), working with the Bank of England, was regulating in a way that is giving confidence about financial stability.
He added: “Nothing is ever going to be perfect; there will always be cases that need to be dealt with and I hope that the FCA is agile enough to respond to the changing picture and to deal with issues when they arise.”
During his trip to Halifax yesterday, Mr Hammond met a number of leading figures from Yorkshire’s financial and professional services sectors, including Vim Maru, the group director for retail, at Lloyds Banking Group.