Fiona Jackson reviews the promise in Wednesday’s Budget Speech to reform the UK’s money laundering regime and implement other business-focussed initiatives:
Legal and business professionals alike will have pricked up their ears on Wednesday afternoon as the Chancellor of the Exchequer, George Osborne, announced during the Budget Speech “In our professional and business services, one of our unsung success stories, we will reform our burdensome money laundering regime, promote the UK as the global centre of legal arbitration, and launch a new trusted business visa service.”
Perhaps time constraints prevented greater detail to the House on these objectives, but support for the Chancellor’s statement was published the same day in the joint HM Treasury and BIS document, The Plan for Growth, and in which the Government talks of “A lower domestic regulatory burden” as one of its “Ambitions and Measurable Benchmarks”. Describing initiatives to “make the UK one of the best places in Europe to start, finance and grow a business”, the Plan proposes:
- an unprecedented moratorium exempting micro and start-up business from new domestic regulation for three years;
- scrapping plans for regulations that would have cost businesses over £350 million a year, including stripping back proposed regulation on dual discrimination and third party harassment from the Equalities Act 2010; launching a public thematic review to reduce the stock of regulation in which nominated regulations will be removed unless they can be justified; and implementing Lord Young’s Review on Health and Safety;
- encouraging growth in healthcare and life sciences by the establishment of a new health research regulatory agency to streamline regulation and improve the cost effectiveness of clinical trials; and stripping out regulations that were never meant for the social care market and are preventing market entry and flexible service;
- encouraging growth in professional and business services by the introduction of trusted business visa service schemes and the new visa regimes for entrepreneurs and high net worth investors; and work to promote the sector in the EU and overseas and to address wider regulatory burdens...;
Noting the need for action, the Plan claimed: “The Government believes that other objectives were allowed to take precedence over the competitiveness of UK businesses, leading to an increase in the burden of regulation. The cumulative additional cost to business of new regulations introduced since 1998 is estimated at nearly £90 billion a year. This burden of regulation is a particular challenge for small firms, and a significant disincentive for new businesses considering taking on their first employees.”
Acknowledging that our legal system is respected around the world, the Plan nevertheless accepts problems with the current regulatory regime for business (perhaps with a nod also to the MoJ’s struggles to provide Guidance to support the delayed Bribery Act 2010!):
“As some measures show, regulation is hampering enterprise in Britain. In the past six years, the UK’s ranking by the World Economic Forum has fallen from 39th to 89th out of 139 countries in terms of business perception of the burden of regulation. The burden of regulation is one of the most common complaints of business, and SMEs often suffer disproportionately. In recent years, on average, more than six new regulations were introduced every working day. There are currently over 21,000 regulations and statutory instruments on the statute books. Estimates put the cumulative cost to business of regulations introduced since 1998 at nearly £90 billion a year. There is a £1 billion burden for business from complying with employment law alone. And government has not done enough to support business when introducing new regulations. Guidance is often not provided, is provided after the regulation has come into force, or is not provided in a way that makes sense for businesses.”
In a shot across the bows to lawyers and advisers though, the Plan warns that: “Simply through government cutting out the jargon and making the rules straightforward to understand, businesses could save some of the £1.4 billion currently spent on advice from consultants.”
The Government recognises the burdens of the money laundering regime: “Over time, both the volume of reporting requirements for UK business, and associated costs, have increased, and businesses and investors have stressed that there are ways to be more flexible and targeted in applying rules on reporting, accounting and audit.”
Responding to particular concern from specialists in the Professional and Business Services markets about the implementation of the Bribery Act 2010 and Money Laundering Regulations, the Plan reminds readers of the forthcoming Guidance on the Bribery Act 2010, and claims that the Government wants to abolish over two dozen regulatory offences under Money Laundering Regulations and exempt businesses with very low turnovers to reduce compliance burdens. In addition the Government will “shortly consult on detailed proposals for changes to Money Laundering regulations, to further strengthen the risk-based approach. These and other measures will be designed to ensure that the Regulations continue to deliver an effective and proportionate anti-money laundering regime, while minimising the burdens they impose on businesses.”
Seeking to minimise regulatory burdens overall, in more detail the Plan undertakes to:
- scrap proposals for specific regulations which would have cost business over £350 million a year;
- introduce an unprecedented moratorium on new domestic regulation for micro- businesses and start-ups for the next three years.
- launch a public thematic review to reduce the stock of regulation, with the presumption that all regulations identified as burdensome would be removed unless good reasons are given for them to stay.
- push the EU Commission to deliver a culture change that bears down on the overall impact of EU legislation, including urging the Commission to set a new ambitious target to cut EU regulatory burdens over the life of this Commission.
- implement the proposals from Lord Young’s review of health and safety, including bringing in new risk assessment tools, the registration of health and safety consultants, combined inspection programmes and taking action to constrain ‘no- win, no-fee’ legal services.
And of special interest to competition lawyers, in seeking to stimulate competition the Government proposes to:
- reform and further invigorate the UK’s world-class competition framework, including consulting on a proposal to merge the competition functions of the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority; and
- publish a binding set of principles of economic regulation to provide greater certainty for long-term investors in UK infrastructure, by April 2011.
Finally, there is a promise to promote the UK as the world leader in legal arbitration and commercial law services, and also to protect the supremacy of English contract law.
Here at 33 Chancery Lane we look forward to providing further advice to Government consultations on regulatory change, as well as continuing as a market-leader for services to our clients in money laundering and regulatory litigation. If you want to know more about how we can help you please contact Martin Adams, our Practice Director: email@example.com