Rules overhaul could release £22bn for UK exporters, ICC tells City watchdog
The UK arm of the world's largest business organisation said in an open letter to Britain's financial regulator that there is an 'urgent need' for reform of the rules governing trade finance, the financial instruments that facilitate global trade.
In a letter to Financial Conduct Authority chief Nikhil Rathi, Chris Southworth, the ICC UK's secretary-general, said the trade finance system suffers from a 'bureaucratic and inefficient' regulatory structure.
He told Rathi small and medium-sized exporters are beset by 'laborious compliance checks and over-burdensome capital requirements'.
It said the rules have negated the gains resulting from the Electronic Trade Documents Act (ETDA) 2023, which grants digital trade documents the same legal status as their physical counterparts.
According to the ICC, the ETDA has reduced average trade transaction times from two to three months to just one hour, and lowered transaction costs by up to 80 per cent.
Call for change: Regulations should be overhauled to release £22billion in trade finance and cut costs for small and medium-sized firms, the International Chamber of Commerce has urged
This has been compounded by a 'culture of fear and risk aversion' as a consequence of enforcement actions and penalties levied on financial institutions over a decade, according to Southworth.
He has called on regulators to enact the Basel III reforms - a series of measures to enhance the banking system's defences against economic shocks - more quickly so their benefits can be realised within the current Parliament.
HM Treasury and the Prudential Regulation Authority have delayed the application of Basel III until the beginning of 2027. The reforms are due to be fully implemented by January 2030.
Southworth said the timeframe fails to reflect what businesses are 'doing in the real world and lacks the ambition and urgency required to meet the scale of the economic challenge facing the UK'.
He called for 'more proportionate, lighter touch' regulations for trade finance, especially 'know your customer' (KYC) processes, which financial firms use to check their customers' identity.
The ICC also wants the capital requirement threshold lifted for trading SMEs to help shrink the £22billion trade finance gap.
Despite the UK underpinning 60 per cent of global trade finance, Southworth said that countries like India, the US, and the United Arab Emirates have 'more agile and responsive regulatory frameworks and digital infrastructure'.
The ICC said that making reforms was 'not only a growth opportunity but also an opportunity for the UK to be the global hub for modern, digital trade finance. Saying no to reform or continuing to delay it is no longer an option'.
An FCA spokesperson told This is Money that it was 'testing' the idea of relaxing KYC rules on small transactions with the UK Government, having sent a letter to the Prime Minister last December suggesting such an idea.
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South Wales Argus
an hour ago
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Charles and the Queen are set to welcome the French leader and his wife Brigitte to Windsor Castle on Tuesday as Mr Macron begins his three-day state visit to the UK. At a glittering banquet in the historic Berkshire landmark in the evening, the monarch will deliver a speech, highlighting how 'these challenges know no borders: no fortress can protect us against them this time'. The King will deliver a speech at the state banquet in honour of French president Emmanuel Macron (Chris Jackson/PA) But he will tell Mr Macron that Britain and France can help lead the way in confronting threats relating to defence, technology and climate change, saying: 'Our two nations share not only values, but also the tireless determination to act on them in the world.' Charles and Camilla are hosting Mr Macron and the first lady at the historic royal residence. They will be feted with a carriage ride through the town, a ceremonial welcome and the opulent state dinner. Brigitte Macron and the Queen join in with a toast alongside the King and French President Emmanuel Macron at a Palace of Versailles banquet in 2023 (Daniel Leal/PA) The King, in his toast, will reflect on 1,000 years of 'shared history and culture between our two peoples', including many of the royal family's personal connections to France. 'For centuries our citizens have admired each other, amused each other, and imitated each other', he will say, and reveal how he remains 'in awe of France's extraordinary attributes and achievements'. Charles will also hail the Anglo-French partnership as vital amid the many challenges of today, saying: 'Our two countries face a multitude of complex threats, emanating from multiple directions. 'As friends and as allies, we face them together.' The King delivering a speech at the State Banquet at the Palace of Versailles, Paris in 2023 (Daniel Leal/PA) It marks the first state visit to the UK by an EU head of state since Brexit, and will see Mr Macron address parliamentarians in the Palace of Westminster's Royal Gallery and, on Thursday, join a UK-France Summit at Downing Street. Prime Minister Sir Keir Starmer has signalled a 'reset' in relations between the UK and Europe as he looks to heal the wounds caused by the Brexit years. Defence, growth, security, migration and French tactics on tackling small boats will be discussed, with the two leaders expected to dial in to speak to other allied nations who are looking to support any future peace deal in Ukraine. Downing Street said on Monday that the UK's relationship with France was 'key' to dealing with boat crossings, following reports French police officers had used knives to puncture a boat off the coast. Prime Minister Sir Keir Starmer during a bilateral meeting with Mr Macron at the G7 summit in June (Stefan Rousseau/PA) The Prince and Princess of Wales will also play a role by meeting the president and the French first lady at RAF Northolt on Tuesday morning on behalf of the King and travelling with them to Windsor. Charles and Camilla will formerly greet their guests on a Royal Dais constructed on Datchet Road in Windsor town centre, with the castle in the backdrop as gun salutes sound in nearby Home Park. The King, the Queen, the Waleses and Mr and Mrs Macron will then take a carriage procession through Windsor and along part of the Long Walk which leads to the castle, just as former French president Nicolas Sarkozy did in 2008. Mr Macron's state visit to the UK, from July 8-10, is the first to be hosted at Windsor Castle, rather than Buckingham Palace, in a more than a decade since that of the Irish president Michael D Higgins in 2014. Guests listen during a speech by Queen Elizabeth II in honour of the President of Ireland Michael D Higgins at Windsor Castle in 2014 (Dan Kitwood/PA) State visits, which capitalise on the royals' soft power to strengthen diplomatic ties overseas, will be hosted at Windsor for the next few years while reservicing work continues at the London Palace and starts to affect the state rooms. The last state visit to the UK from France was in March 2008 when the now-disgraced Mr Sarkozy, since convicted of corruption and influence peddling, and his wife Carla Bruni, were the guests of Elizabeth II at Windsor. The arrangements are likely to form the template for US President Donald Trump's high-profile state visit in September, but much will depend on security considerations for the US leader, who survived an assassination attempt last year. A ceremonial welcome will be staged in the castle's quadrangle with Camilla, William, Kate and Mrs Macron watching as the King and Mr Macron inspect the Guard of Honour. The Prince and Princess of Wales will also take part in the state visit (Yui Mok/PA) Lunch will be hosted in the State Dining Room, after which the president and his wife, the King and Queen and members of the royal family will view a special exhibition of items relating to France from the Royal Collection in the Green Drawing and Mrs Macron will also travel to London on Tuesday afternoon to see the Grave of the Unknown Warrior at Westminster Abbey and visit the Palace of Westminster where the French leader will address parliamentarians before meeting opposition leaders at Lancaster House. The King and president will both deliver speeches at the banquet in the medieval St George's Hall, where some 160 guests will be seated at the elaborately decorated 50 metre table, which will run the full length of the vast room. A state visit is being hosted at Windsor Castle for the first time in 11 years (Steve Parsons/PA) Kensington Palace has yet to confirm whether Kate will attend the banquet. The princess opened up about her 'rollercoaster' cancer recovery, its life-changing impact and putting on a 'brave face' last week. The King and Queen paid a state visit to France in September 2023 and enjoy a warm rapport with Mr and Mrs Macron, who will stay in the castle during their trip. Mrs Macron, 72, sparked a storm in May when she was seen pushing her husband's face away with both hands before they disembarked a plane in Vietnam. Emmanuel Macron and his wife Brigitte (Gareth Fuller/PA) The 47-year-old president dismissed the gesture – caught on camera – as horseplay, but it caused a stir in France, with daily Le Parisien newspaper asking: 'Slap or 'squabble'?' The couple, married since 2007, met at the high school where Mr Macron was a student and Brigitte was a married teacher. The visit comes a year after the UK and France celebrated 120 years since the signing of the Entente Cordiale. The Anglo-French agreements in 1904 ushered in improved relations between the two countries which had fought against each other during the Napoleonic Wars.
