Brexit is not an opportunity to turn the City of London into “Singapore-on-Thames”, an influential group of MPs Rishi Sunak has warned.
In a new report on the future of financial services regulation, the Treasury Select Committee warned that Britain’s exit from the EU should not be used to trigger “immediate or dramatic changes” to financial services regulation in the UK.
The report states: “The Treasury should respect the principle of regulatory independence and must not pressure regulators to weaken or water down regulatory standards.
“We will remain vigilant if there is evidence that regulators are coming under undue pressure from the Treasury Department to unduly weaken regulatory standards.”
The warning comes as Mr Sunak, the Chancellor, seeks to roll back EU-era regulation of the financial services industry in a bid to make the Square Mile more competitive.
The Government is putting forward a new Financial Services and Financial Markets Act, announced in the Queen’s Speech last month, which aims to “cut red tape in the financial sector”.
The Treasury’s select committee acknowledged in its report that Brexit offers opportunities to ease regulatory burdens without weakening standards.
Since the UK left the EU, ministers have announced plans to drop parts of the controversial Solvency II regime for insurers and have already revised London’s licensing rules.
Mel Stride, Chair of the Treasury Committee, said: “The financial services sector is at a turning point as regulators gain new powers following the UK’s departure from the EU.
“While it is critical that regulators do not rely on unduly watering down regulations, there are likely real ways to ease regulatory burdens without weakening standards.”
FCA and PRA should have a “secondary objective” to foster long-term economic growth and should also consider how to improve engagement with the poorest consumers, the report said.
But MEPs on the committee said competitiveness should not become a “prime objective” of regulators like the Bank of England’s Financial Conduct Authority and Prudential Regulatory Authority.
Mr Stride said: “It is also important that regulators aim to encourage growth, not just for the financial services sector but for the broader economy.”
The report also criticized the FCA for being too slow to authorize companies, saying that this delay is stifling the progress of fintech and crypto-asset deals.
https://www.telegraph.co.uk/business/2022/06/16/dont-turn-london-singapore-on-thames-mps-tell-rishi-sunak/ Don’t turn London into ‘Singapore-on-Thames’, MPs tell Rishi Sunak