Pledge of post-Brexit overhaul of regulation comes as some executives worry about reform of EU laws going too far
Kwasi Kwarteng, the UK’s new chancellor, has told financial services bosses he wants a “Big Bang 2.0” in the City, driven by a post-Brexit overhaul of regulation to boost the sector’s competitiveness.
He told 14 senior executives on a call on Wednesday that he and new prime minister Liz Truss wanted London to become the world’s leading financial centre.
Talk of a post-Brexit drive to eliminate red tape is a familiar theme; former chancellor Rishi Sunak talked about a “Big Bang 2.0” in January 2021, but progress has been painfully slow.
City executives have raised concerns over a planned sweeping deregulation drive by the new administration with new business secretary Jacob Rees-Mogg expected to make cutting EU red tape a key objective.
Rees-Mogg promised a “revolution” to reform EU law retained by the UK after Brexit in his previous role in the Cabinet Office, but financial executives urged him to seek “smarter” rulemaking rather than change for its own sake.
Executives are concerned about the prospect of deregulation being taken too far, arguing that too much cutting will increase costs and cause confusion.
Miles Celic, chief executive of TheCityUK, the financial services lobby group, said that any radical regulatory changes “must be taken in close discussion with industry and recognising that in many areas such regulation is international in nature”.
One City executive added: “Where rules have been made should not take priority over whether rules work.”
Truss has spoken extensively about reforming the EU’s Solvency II rules that govern the insurance sector, intended to release billions of pounds of capital for investment in the economy.
But Solvency II reforms are still being discussed; regulators are nervous that the City’s competitiveness could be undermined if rules are loosened too much and it loses its reputation as a safe place to do business.
Kwarteng urged the City leaders to come up with ideas for regulatory reform, a sign of frustration among Brexiters that the benefits that were supposed to flow from EU exit have been slow to materialise.
“The prime minister and chancellor are determined to regain the City’s status as the world’s leading international financial centre,” said an ally of Kwarteng...
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