BOE Governor Bailey said the UK’s financial services sector should not pay too high a price for access to the European Union’s markets now that the country has formally left the trading bloc without a deal that covered financial services. The bank said Solvency II rules need reforming in the UK.
Governor of the Bank of England (BoE) Andrew Bailey said the UK’s financial services sector should not pay too high a price for access to the European Union’s markets now that the country has formally left the trading bloc without a deal that covered financial services. The bank also said Solvency II rules need reforming in the UK.
Speaking before the Treasury Committee, which reposted the comments on Twitter, Mr Bailey said the UK should not “become a rule-taker”.
“I would strongly recommend that we do not become a rule-taker. I think that is a very bad place to end up in. And if the price of that is no equivalence then I am afraid that will follow,” he said.
“If the price of this [equivalence] is too high then we can’t just go for it whatever,” Mr Bailey continued.
EU and UK financial services access was not part of the last-minute trade deal brokered between the two sides before Christmas, but there is a commitment to agree a memorandum of understanding by the end of March.
The agreement on financial rules could potentially see equivalence granted between the two sides. Mr Bailey said the UK should be granted equivalence based on regulation that is matched to outcomes, rather than having to transpose EU rules into UK law.
Also speaking before the panel, deputy governor of the BoE Sam Woods said solvency rules for insurers, currently under the EU’s Solvency II regulation, need reforming.
“There are some things in Solvency II that don’t work terribly well and the most obvious of that is the risk margin. The industry and we agree that the current design isn’t good and needs to be fixed,” Mr Woods said.
More broadly, Mr Woods said Solvency II carries a staggering level of detailed legislation that is “not a sensible way to promote policyholder protection or safety and soundness of insurance”.
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