Brexit is not an opportunity to turn the City of London into ‘Singapore-on-Thames’, warned Rishi Sunak, an influential group of MPs.
In a new report on the future of financial services regulation, the Treasury select committee has warned that Britain’s departure from the EU should not be used to trigger “instantaneous or dramatic changes” in the regulation of financial services in the UK.
The report states: “The Treasury should uphold the principle of regulatory independence and should not pressure regulators to weaken or water down regulatory standards.
“We will remain alert to any evidence that regulators are under undue pressure from the Treasury to inappropriately weaken regulatory standards.”
The warning comes as Mr Sunak, the Chancellor, is set to roll back European-era regulation in the financial services sector in a bid to make the Square Mile more competitive.
The government is introducing a new Financial Services and Markets Bill, which was announced in the Queen’s Speech last month, with the aim of “cutting red tape in the financial sector”.
The Treasury Select Committee admitted in its report that Brexit offers opportunities to reduce regulatory burdens without weakening standards.
Since Britain’s departure from the EU, ministers have announced plans to scrap swathes of the controversial Solvency II regulations governing insurers and have already overhauled London’s listing regulations.
Mel Stride, Chairman of the Treasury Committee, said: “The financial services sector is at a turning point, with regulators assuming new powers following the UK’s exit from the EU.
“While it is vital that regulators are not called upon to inappropriately water down regulations…there are likely real opportunities to ease regulatory burdens without weakening standards.”
FCA and PRA should have a “secondary objective” to promote long-term economic growth and should also consider how to improve engagement with poorer consumers, according to the report.
But committee MPs said competitiveness should not become a ‘primary objective’ of regulators such as the Financial Conduct Authority and the Bank of England’s Prudential Regulatory Authority.
Mr Stride said: “It’s also important that regulators aim to promote growth, not just for the financial services industry, but for the wider economy.”
The report also criticized the FCA for being too slow to clear companies, saying the delay was holding back the progress of fintech and crypto-asset firms.
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Source: www.telegraph.co.uk
This notice was published: 2022-06-16 05:00:00