Britain begins post-Brexit financial services ‘transformation’

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Britain’s financial regulators will have to promote the global competitiveness of the country’s financial sector, although a plan to strengthen government oversight of their work has been put on hold for now, Finance Minister Nadhim Zahawi said on Tuesday.

Zahawi confirmed that a long-awaited Financial Services and Markets Bill will be introduced in Parliament on Wednesday to “capitalize on the benefits of Brexit and transform the UK financial services sector”.

Bankers have called for rapid reforms to bolster London’s attractiveness as a global center for finance following Britain’s departure from the European Union.

Amsterdam has already overtaken London as Europe’s top stock trading hub, prompting Britain to ease listing rules as it tries to persuade chip designer Arm to list in London.

UK regulator could run out of bandwidth to boost post-Brexit competitiveness: policymaker

Zahawi said the bill, which includes cutting insurers’ ‘excessive’ capital reserves for infrastructure investment, would unlock ‘tens of billions of pounds’, a step that would pit him against a Bank of England more cautious.

The bill also cracks down on financial scams, ensuring vulnerable people and rural areas have access to cash, and introduces rules for using stablecoins, a type of crypto-asset, for payments.

“Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while acting to protect access to cash for the millions who depend on it,” Zahawi told guests at the annual dinner. City of London Mansion House in historic quarter. financial district.

The UK payments systems regulator will have the power to reimburse victims of what is known as authorized push payment fraud, when fraudsters trick people into sending them money online.

Regulators like the Bank of England and the Financial Conduct Authority will be given a secondary objective of promoting the global competitiveness of the financial sector, a requirement that many regulators around the world already face.

Still, some lawmakers fear it heralds a return to the kind of lean regulation that resulted in bank bailouts during the financial crisis. Zahawi said the new goal would be “unambiguously” secondary to maintaining financial stability and protecting consumers.

Part of the bill transfers legacy laws from the EU to the rules of UK regulators, making it easier to change them in the future, but also giving watchdogs far more influence at the expense of Parliament.

As a counterweight, the finance ministry said it could give itself “appeal” powers to tell regulators to review a rule if it felt it would be in the public interest.

Lawmakers have said this should be done sparingly, and Bank of England Governor Andrew Bailey last week warned that independence from regulators was part of London’s position as a global financial centre.

Zahawi said appeal powers would not be in the bill, indicating a more cautious approach. “I want time to consider all the arguments before making such an important decision.”

Caroline Wagstaff, chief executive of the London Market Group, which represents the insurance market, said the new financial services bill would only boost the sector if regulators’ goal of competitiveness had real powers.

“The bill absolutely must contain enough detail on how regulators will be held accountable on the issue of competitiveness, otherwise it will not achieve the regulatory culture change that we need, and it will only be words on one page,” Wagstaff said.

Vincent Keaveny, Lord Mayor of the City of London, said a clear commitment is needed on how regulators will focus more on competitiveness, but a ‘regulatory bonfire’ would damage the sector’s international reputation .

A government-sponsored review on Tuesday made recommendations to speed up how listed companies can tap the markets for additional funding, and Zahawi said they had all been accepted by the government.

A new digitalization task force, chaired by former HSBC chairman Douglas Flint, will drive the modernization of share ownership by eliminating paper certificates.

The government will also streamline the process of raising capital by reforming the Companies Act to speed up rights issues and the processes around them, Zahawi said.

The first annual “State of the Sector” will be released on Wednesday to affirm the government’s “sector vision”.

(Additional reporting by David Milliken; editing by Chizu Nomiyama and Jonathan Oatis)

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