Andrew Bailey, the governor of the Bank of England, said today there was no backhand deal done between the central bank and the government over a post-Brexit shake up of the UK’s financial rules regime.
Responding to questions from MPs during a Treasury Committee meeting today, Bailey, 63, said the Bank “did not trade Solvency II for the call-in power”.
The government recently shelved the so-called call-in powers, which sought to give lawmakers the power to go over regulators’ heads when setting rules governing the City’s banks and financial services firms.
If the plans did get through parliament, they would have “severely undermined” the independence of regulators, Bailey said today.
Solvency II is being ditched as part of the government’s push to cut red tape on City firms after Brexit.
The EU-concocted rules require insurers to set aside billions of pounds to absorb possible losses.
Critics argue, however, that it seals off money that could be invested in things like green energy infrastructure.
Backers of the status quo believe keeping the rules would help prevent losses from insurance firms collapsing spreading to the rest of the financial system.
Although City minister Andrew Griffith said the call-in plans have been kicked into the long grass last month, he did open the door to revisiting the changes in the future.