Financial services companies are being battered by a tidal wave of regulation which is diverting IT and training budgets and threatening to undermine the sector's massive contribution to the UK economy, according to a new CBI report on the industry.
The business organisation is calling for a moratorium on new regulation, arguing that the sheer volume of new European legislation is threatening to endanger the global status of UK financial services.
CBI Deputy Director-General, John Cridland, says that companies are being forced to divert resources from productive projects to deal with new regulation: "It's vital that companies are given a substantial breathing space and not another onslaught."
The CBI report stresses the importance of the financial services industry to the UK economy, which employs over a million people and generates over five per cent of GDP. It spells out the impact of wrapping the sector in red tape as management time is diverted away from developing the business and serving customers.
CBI retail banking members say they are spending 15 per cent of their total IT budgets on compliance and that up to a third of all staff training last year was about new regulation.
The report points to a lack of overall strategy among overlapping UK regulatory bodies and too little time spent promoting the sector.
John Cridland adds: "Companies know that they have to overcome the fall out from issues such as endowment mis-selling and are determined to put their own house in order. But they clearly feel that the entire industry is being unfairly tarred with the same brush. They need the government to champion their cause even more strongly at home and in Brussels."
In a statement, UK financial watchdog, the FSA retorts: "Although the majority of the FSA's current policy effort is driven by European policy initiatives, our general approach is not to impose obligations beyond what is required by Directives."