As a Labourite and a Finance Lawyer, we are better in the EU

By Bilal Mahmood / @bilal_labour

I’ve had to walk a tightrope between my career and my politics for a long time now. When introducing myself in Labour circles as a Banking and Finance Lawyer, who was the Parliamentary candidate against Iain Duncan Smith, people often look at me as if I had said that I thought I might have run over their cat.

But I’ve reconciled the two. I got into this career because growing up working class and Asian, I wanted a career that let me build on my skills, but a job that meant I had the financial security the lack of which kept my parents awake at night. And if the Labour Party is a party of government, we need all walks of life contributing to ideas and policies. It also means I could contribute in my community in ways that are really needed, such as being a director of the East London Credit Union, a Co-operative Credit Union that aims to provide fair financial services to all members of society.

The British public has very good reason to be wary of the financial services sector. But it is here to stay, and is a necessary part of everyday life. So we should make sure it works for us rather than just for the secret clients of Panamanian law firms.

I look at the #Brexit question as a City Lawyer and a Political Campaigner. The EU, not this government, has been pushing for a more secure financial sector. Thanks to nearly 40 pieces of EU legislation since 2008, financial institutions are now being regulated in a way to protect people’s savings and investments. If the Conservatives had their way, I doubt we would have seen much change in what’s expected from a bank. Many claim that the EU burdens us with too many laws. In general, some may be burdensome and unnecessary, but when it comes to the financial sector, the EU has robustly tried to solve the problems in the financial sector exposed by the global financial crash in 2008.

As exciting as the supranational regulation of financial institutions can be, one can be forgiven for getting lost in the details in this area. So it’s best to draw out the differences that the EU has made that will have a direct impact to you and me, and you can read about them here.

Banks don’t actually hold all the cash that people place on deposit with them. They’re allowed to lend more than they hold, subject to certain proportions (these are called capital adequacy). Thanks to the EU, banks are required to hold more money on deposits (under the CRD and Basel capital adequacy regimes) than they used to. This means that they have more immediate assets to provide to their customers in the event that there’s another Northern-Rock type run on a bank. It also means that financial institutions to take a second, stronger look at how they view risk and reward when selling products.  It’s a genuine way of regulatory reform trying to reshape the way banks approach risk.

The Guaranteed Deposit Scheme led to the creation of the FSCS in Britain, which guarantees your savings of up to £75,000. So even if there was a bank collapse where you had an account, you could rest assured a lot of it will be absolutely safe.

The EU has also been pushing for the right to a bank account, with greater transparency of fees and easier switching between accounts. At the East London Credit Union, we hear stories of people refused loans or accounts with High Street banks or spiral into debt and overdrafts because of hidden fees they didn’t realise they were signing up to. Some are forced into the arms of pay-day lenders or worse. These proposed reforms would ensure everyone would have fair access to bank accounts, loans and savings. That’s good for you, for your kids and the small businesses in Britain, all of whom need access to credit and a way to save hard earned money. The EU has the reach apply these changes across the region. Only then do those changes take hold because inter-connected nature of the banking system.

And that’s the biggest flaw in the ‘Out’ campaign. It’s an assumption that the world economy can be plugged into by one country from a purely economic perspective. The nature of the banking system is so interdependent, that it’s basically impossible to go back to the way things were. Not only are banks and their businesses intrinsically linked across borders, their regulatory regimes are as well. In order for banks (and by extension, the businesses that borrow and save and invest with them) to thrive, they need easy and certain access to other markets. This will take an uncertain period of time, during which Britain would haemorrhage trade and opportunity while it negotiates deals without the collective bargaining of the Eurozone behind it. Part of that flawed assumption is based on a historic ideal of what Britain used to be. But that goes beyond this article.

So the #Brexit question brings with it a rare mix of my career and my politics. Up until now, the ‘In’ campaign (of which I’m a supporter) has mostly highlighted the negative effect of leaving the EU. That’s a fair argument. I’m worried about successive Conservative governments dismantling workers rights, social care and freedoms of movement as much as the next comrade.

But when it comes to the financial services sector and the EU, there’s actually a story of progress. Technical, detailed and flawed perhaps, but a story nonetheless. I may be too glass half full when I look at it, but for me, that’s a positive story of why we should remain in the EU as part of this progress. I want us to remain in to be part of that of that progress, and why I’ll be voting to remain in the EU.


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