Bailey: City red tape should ‘flush out’ excessive bank profits but not cap them

July 14, 2026 - 19:50

Bank of England Governor Andrew Bailey has pushed back against calls for direct profit caps on lenders, arguing instead that regulatory bureaucracy should naturally "flush out" excessive earnings. Speaking to City executives, Bailey dismissed the idea of imposing legal limits on bank profits as too blunt an instrument.

Bailey told a gathering of finance bosses that the current system of oversight, while often criticized as red tape, serves a purpose in curbing risk-taking that leads to outsized returns. He suggested that if banks are making too much money, it is a sign that regulatory guardrails are not tight enough, not that the state should step in with a price control.

The Governor also took aim at industry lobbying, stating that arguing for less regulation was "unhelpfully reductive." He warned that a race to the bottom on rules would ultimately harm the sector's stability and public trust. His comments come amid growing political pressure to address the cost of living crisis, with some lawmakers demanding that banks share more of their windfall profits with customers. Bailey's stance signals that the central bank prefers to tighten existing rules rather than introduce new, politically charged measures like profit caps.