The City’s main regulators, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), will be given new powers to set rules as the UK moves away from the EU framework after Brexit, according to Government proposals.
Regulators will be required to consider how the UK’s financial sector
can grow and compete internationally when setting out rules that could
crack down on bad practices.
“The plans would require the FCA and the PRA to consider both the
implications for growth and international competitiveness of their
regulations, as well as their existing objectives of maintaining market
integrity, consumer protection and a sound financial system,” the
Treasury said yesterday.
In a consultation document, the Government said that it plans to keep
the FCA and PRA as separate entities, and supports reforms that were
brought in to the Bank of England, including the creation of its
Financial Policy Committee.
It cited an IMF study which claimed that “when independent regulators
make judgments on the design of regulatory standards, they are likely
to deliver more predictable and stable regulatory approaches over time.”
Yet the consultation also includes plans that would reign in some of
the regulators’ independence by giving Parliament and the Treasury
“strengthened scrutiny and oversight over the FCA and PRA, appropriate
to the increased rule-making powers received by the regulators.”
UK rulebook
After Brexit, EU regulations had been transferred into the UK
rulebook. However, the Government has now proposed to leave it to the
regulators to decide how to replace these rules.
The process will probably take several years, the paper added.
Chancellor of the Exchequer Rishi Sunak said: “Earlier in the year, I
set out my vision for an open, green, and technologically advanced
financial services sector that is globally competitive and acts in the
interests of communities and citizens across the UK, creating jobs,
supporting businesses and powering growth across the UK.
“One important part of that vision is ensuring, as an independent
nation, that we have a coherent, agile and internationally respected
approach to financial services regulation that is right for the UK.
“Today’s proposals will support the future strength of the UK as a
global financial centre, ensuring an agile and dynamic approach to
regulation that supports the growth of the UK economy, without diverging
from our continued commitment to high international standards.”
City AM
© City A.M.
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