Like the rings of ancient trees, you can tell how long a business journalist has been around by the number of ‘bonfires of red tape’ they have witnessed. I don’t quite recall Board of Trade president Harold Wilson’s ‘bonfire of controls’ of 1948 (and what became of him?). But I must have been beginning to take an interest in politics when Margaret Thatcher pledged to torch regulations for small businesses in the 1980s.
As for New Labour’s incendiary ‘Regulatory Impact Unit’ of 1999, I’ve probably got a charred news clipping somewhere.
This century? Too many conflagrations to detail here.
And so the cycle continues. Governments make grand proclamations about ‘getting out of the way’ so entrepreneurs can drive much-needed economic growth. And yet the economy remains maddeningly reluctant to cooperate. GDP has lagged in the laissez-faire era. Perhaps it will be ‘different this time’, as they are fond of saying in the City of London. But in our rentier economy? I doubt it.
There was also a paradox in what the Treasury rather sibilantly hailed as a ‘blitz on business bureaucracy’. The Law Society and its beancounting brethren at the Institute of Chartered Accountants in England and Wales fear that transferring anti-money laundering responsibilities to the Financial Conduct Authority will actually increase compliance costs for business (including their own members).
Perhaps so. Change always leads to costs and capacity challenges. Yet the transfer is no surprise. Currently, AML and counter-terrorism financing come under no fewer than 25 different bodies – three public sector and 22 private. The government promised ‘clearer and more proportionate’ AML regulations for lawyers. This at least has the potential to deliver.
‘Long term, it should lead to a more coordinated approach to regulation,’ says Paul Bennett, a partner with Bennett Briegal who advises law firms on compliance. ‘Crucially, the FCA has the right doorways to walk through for a joined-up approach to AML, aligning banks, finance houses and law firms. The key question will be are they capable of simplification, so that law firms can do AML better.’
We’ll have to wait a while to find out. Funding and transition arrangements have yet to be determined and there will be another consultation in November. You’re stuck with the SRA for a while yet.
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