The UK’s changes to the EU’s catalogue of financial services rules will not become a “race to the bottom”, City minister John Glen has vowed.
Glen today said the government had “an unshakeable abiding interest in a prosperous Europe” and that “it is time to put to bed” the notion that the EU will have stronger regulatory standards than the UK post-Brexit.
City A.M. reported last week that chancellor Rishi Sunak will bring forward the Financial Services and Markets Bill to parliament next month, which will see the UK replace retained EU regulations to create a new regime for the City.
The package of measures, which Sunak has said could start a second “big bang” for the City, aims to maintain the UK’s global competitiveness as it diverges from the EU financial services rulebook post-Brexit.
Glen told the TheCityUK annual conference in London that the new bill would “show the world that far from the bonfire of regulations that has been speculated about, that we are already looking how to strengthen those world leading regulatory standards to promote the UK’s position as a leading global financial centre”.
“We have been afforded a unique opportunity to reset the system and do things differently and we will – this work is underway,” he said.
“Our seat at the table of global financial giants is secured. But I want us not to just survive the status quo, but I want us to grow.”
The bill will outline plans to ease the EU’s Solvency II regulation, which forces insurance firms to set aside a certain amount of capital in order to withstand economic shocks, and relax other capital rules in a bid to free up investment.
The Treasury says the change to Solvency II will free up tens of billions of pounds of private sector investment for insurance firms.
It will also include a new clause that forces the UK’s financial services regulators to promote competitiveness and economic growth.
Some campaigners, including former Liberal Democrat leader Sir Vince Cable, have warned that making regulators promote the City’s international competitiveness will risk the livelihood of consumers and leaves the UK at danger of experiencing another financial crash.
Shadow chancellor Rachel Reeves told TheCityUK conference that Labour will support the new competitiveness directive.
“We need to see the bill and legislation when it is drafted and available, but in principle I’m in favour of that. The competitiveness of the City and the financial services sector is hugely important for the UK economy as a whole,” she said.
“It will be an important thing to remind the regulators that of course we need a robust regulatory system … but we also need to make sure our sector is moving with the times and is competitive within the new industries in financial services.”