Britain’s finance ministry will push ahead with implementing plans which require regulators to take into account of the financial sector’s global competitiveness when writing rules.
A group of campaigners last week warned that the plans could make regulators “cheerleaders” for finance.
There is widespread backing in the sector for the Bank of England's Prudential Regulation Authority and Financial Conduct Authority to have a secondary objective of helping the City of London stay competitive globally, a remit many regulators across the world already have.
“The government therefore intends to provide for a greater focus on growth and international competitiveness through the introduction of secondary objectives for the PRA and FCA,” Rohan Lee, deputy director for financial services strategy at the ministry told a City & Financial conference.
“This will increase the regulators’ focus on supporting the UK’s financial services sector without jeopardising the financial stability that underpins it.”
The ministry will also have powers to require regulators to rethink existing rules, and there will be a new panel to require regulators to show the costs and benefits of proposed rules, Lee said, steps which critics say could crimp the independence of regulators.
The finance ministry is expected to set out legislative proposals this year to replace “significant amounts” of EU financial laws with rules from UK regulators.
“It will take some years to bring this to fruition,” Lee said.
Britain's financial sector has been largely cut off from the EU since it left the bloc, and Brussels signalled on Tuesday it would cut access further in clearing euro derivatives.
Britain has already eased listing rules and the ministry is due to set out plans to make capital markets more attractive, though financial industry officials want faster action as the EU reforms its own rules more quickly.
The BoE has warned banks that a competitiveness objective will not mean a return to “light touch” supervision seen before the global financial crisis.
Sarah Pritchard, the FCA’s executive director for markets, said the watchdog would stick to “high international standards”.
Charlotte Clark, director of regulation at the Association of British Insurers, said it was unclear what happens if the cost/benefit panel said no to planned rules in the trade off between keeping markets safe and boosting competitiveness.– Reuters
