Britain starts post-Brexit ‘transformation’ of finances

  • UK wants to preserve London’s financial position after Brexit
  • Regulators focus on competitiveness, not just stability
  • Capital rules for insurers are relaxed to stimulate investment
  • Zahawi pauses plan for increased government oversight of regulators

LONDON, July 19 (Reuters) – British financial regulators will have to promote the global competitiveness of the country’s financial sector, although a plan to increase government oversight of their work has been shelved for now, Finance Minister Nadhim Zahawi said on Tuesday.

Zahawi confirmed that a much-anticipated bill on financial services and markets will be submitted to Parliament on Wednesday to “take advantage of the benefits of Brexit and transform the UK’s financial services sector”.

Bankers have called for swift reforms to bolster London’s attractiveness as a global financial center following Britain’s exit from the European Union.

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Amsterdam has already overtaken London as Europe’s main trading center for equities, prompting Britain to relax listing rules as chip designer Arm tries to persuade a listing in London.

Zahawi said the bill, which includes cutting “excessive” capital buffers at insurers to invest in infrastructure, would unlock “tens of billions of pounds”, a move that pits it against a more cautious Bank of England.

The bill also tackles financial scams, ensures vulnerable people and rural areas have access to cash, and introduces rules for using stablecoins, a type of cryptoasset, for payments.

“Consumers will continue to be protected, with legislation ensuring victims of scams can be compensated while protecting access to cash for the millions of people who depend on them,” Zahawi told guests at the City’s annual Mansion House dinner. of London in the historic Financial District.

Britain’s Payment Systems Regulator is given the power to compensate victims of so-called authorized push payment fraud, when fraudsters trick people into sending them money online.

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

Nevertheless, some lawmakers fear this could herald a return to the kind of light regulation that ended up bailing out banks during the financial crisis. Zahawi said the new target would be “unambiguously” secondary to maintaining financial stability and protecting consumers.

Part of the bill shifts laws inherited from the EU into the rulebooks of UK regulators, making it easier to amend them in the future, but also giving watchdogs much more leverage at the expense of parliament.

As a counterbalance, the Treasury Department had indicated that it could grant itself “call-in” powers to tell regulators to revise a rule, if it believed it would be in the public interest.

Lawmakers have said this should be done in moderation, and Bank of England Governor Andrew Bailey warned last week that regulator independence was part of London’s position as a global financial center.

Zahawi said enabling powers would not be in the bill, suggesting a more cautious approach. “I want to have time to consider all 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 industry if the competition target for regulators had real teeth.

“The bill must contain absolutely sufficient detail on how regulators will be held accountable on the issue of competitiveness, otherwise it will not bring about the change in regulatory culture we need, and it will be just words on a page.” said Wagstaff.

Vincent Keaveny, mayor of the City of London, said a clear commitment is needed to determine how regulators will focus more on competitiveness, but “joyful regulation” would damage the industry’s international reputation.

A government-sponsored review on Tuesday included recommendations to speed up how publicly traded companies can tap into markets for additional funding, and Zahawi said they have all been accepted by the government. read more

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

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

The first annual “State of the Sector” will appear on Wednesday to confirm the “cabinet’s view on the sector”.

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Additional reporting by David Milliken; Editing by Chizu Nomiyama and Jonathan Oatis

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