Professional services are a bedrock of City success
AN insurer talking to accountants may not sound like much of a crowd-drawer in the traditional sense. But when Lord Levene, chairman of Lloyd’s of London, addressed a breakfast briefing at Chartered Accountants Hall yesterday, his comments were enough to spark real interest among the audience.
Levene’s salient point was that we cannot allow one rotten apple – the banking crisis – to spoil the whole financial services industry. While he backs a proper change in the regulation and governance of the banking industry, Levene joined the chorus of City grandees cautioning against a knee-jerk reaction from regulators and politicians.
Speaking to Levene yesterday afternoon, he explained why he believes it is time to move on and look forward. “We have to stop contemplating our navel. The financial services industry in London is still a huge industry and the biggest contributor to tax in the country. Businesses are still doing well,” he said.
It is hard to argue with Levene when he says the primary task for City professionals as well as regulators and politicians is to maintain the competitive advantage of the Square Mile. As he said in his speech, the UK’s financial services industry provides around eight per cent of the national output, yet punches above its weight by contributing 14 per cent of taxes collected thanks to the million-plus people it employs throughout the country. With figures like that it is clear that maintaining the City’s competitiveness is essential.
So how to compete? Levene, like any good capitalist, is all for competition and has worked tirelessly to boost Lloyd’s of London’s competitiveness around the globe. The wider City and financial services industry needs to follow this lead.
“Our competitiveness must be our number one priority,” he told the audience. Pointing to the success of many accountancy firms and Lloyd’s in luring international businesses – creating jobs and wealth for the UK – Levene said it was time to ensure these sectors grow and develop because they are as important as banks to the City.
Among the professional services firms, the Big Four accountants – PricewaterhouseCoopers, Ernst & Young, Deloitte and KPMG – together posted annual revenues of £7.2bn. Lloyd’s just reported profits of £1.32bn for the first half of 2009.
“These figures underpin the reputation of financial services as one of the sectors where the UK retains a distinct competitive advantage,” Levene said.
While bankers may well provide capital, we need accountants to monitor it and for insurers to keep it safe.
That is why an insurer talking to a bunch of accountants is worthy of more than a passing interest.
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