Following the collapse of the Greensill Capital, British finance minister Rishi Sunak has ordered two immediate reviews of the country’s financial regulation.
On Friday, in a letter to a parliamentary committee Sunak said he had accepted its call for reform of the mechanism used by Greensill, known as the “appointed representatives regime”.
Sunak’s letter goes on to say, “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.”
In reference to the regulatory regime revolving around changes of control of banks, Sunak said the Treasury is working with the Prudential Regulation Authority and Financial Conduct Authority to consider how change of control applications are dealt with, and what changes might need to be considered.
In a statement earlier this month, financial regulators said trade finance firms should do more to identify potentially suspicious activities and undertake additional risk assessments.
Earlier this year, Greensill Capital collapsed highlighting risks in Britain’s $1.3 trillion supply chain finance business.
In May, Britain’s Financial Conduct Authority (FCA) said it has begun a formal investigating into Greensill’s UK operations as part of global probes.
In July, parliamentary committee said former British Prime Minister David Cameron showed a lack of judgment in using personal contacts and informal channels to lobby for the collapsed Greensill Capital.