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Britain's Sunak accepts call for financial reforms after Greensill collapse

Published 09/23/2021, 08:29 PM
Updated 09/23/2021, 10:05 PM
© Reuters. FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak in London, Britain, September 7, 2021. REUTERS/Toby Melville/File Photo

(Reuters) - British finance minister Rishi Sunak has ordered two immediate reviews of the country's financial regulation related to the collapse of supply chain finance firm Greensill Capital.

In a letter to a parliamentary committee that issued a report in July related to Greensill's collapse, released on Friday by the same committee, Sunak said he had accepted its call for reform of the mechanism used by Greensill, known as the "appointed representatives regime".

Sunak said in the letter, first reported by the Financial Times, that the Treasury had already started to review the regime, including legislative reforms to strengthen the oversight of appointed representatives to prevent opportunities for abuse of the system.

Regarding reforms of the regulatory regime surrounding changes of control of banks, Sunak said the Treasury is working with the Prudential (NYSE:PUK) Regulation Authority and Financial Conduct Authority to consider how change of control applications are dealt with, and what changes might need to be considered.

Earlier this month, financial regulators said trade finance firms must do more to identify potentially suspicious activities undertaking additional risk assessments.

Greensill Capital's collapse earlier this year highlighted risks in the $1.3 trillion supply chain finance business.

The parliamentary committee in July said former British Prime Minister David Cameron showed a lack of judgment in using personal contacts and informal channels to lobby for the now-collapsed Greensill Capital.

© Reuters. FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak in London, Britain, September 7, 2021. REUTERS/Toby Melville/File Photo

The committee did not call for making supply chain finance in general a regulated activity, but said the appointed representatives regime should be tightened up to reduce "opportunities for abuse".

In May, Britain's Financial Conduct Authority (FCA) said it was formally investigating the UK operations of Greensill as part of global probes.

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