UK's Sunak set to tighten financial regulations after Greensill scandal

[BENGALURU] British finance minister Rishi Sunak has ordered two immediate reviews of UK financial regulation related to the collapse of supply chain finance firm Greensill Capital, the Financial Times reported on Friday.

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

Mr Sunak said he had already commissioned the UK treasury to review the regime, including legislative reforms to strengthen the oversight of appointed representatives to prevent opportunities of abuse, the newspaper said

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 US$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.

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 said it was formally investigating the UK operations of Greensill as part of global probes.

REUTERS