Britain starts “transformation” of finance after Brexit

Britain starts “transformation” of finance after Brexit

  • Britain seeks to maintain London’s economic position after Brexit
  • Regulators need to focus on competitiveness, not just stability
  • Capital rules for insurance companies will be relaxed to increase investments
  • Zahawi stops plan for more state 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 for more 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 law on financial services and markets will be presented to parliament on Wednesday to “capitalize on the benefits of Brexit and transform the UK financial sector”.

Bankers have called for rapid reforms to strengthen London’s attractiveness as a global center of finance following Britain’s exit from the EU.

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Amsterdam has already surpassed London as Europe’s largest stock trading center, which has led the UK to ease its listing rules when trying to persuade chip designer Arm to have a London listing.

Zahawi said the bill, which includes cutting “excessive” capital buffers at insurance companies to invest in infrastructure, would unlock “tens of billions of pounds”, a step that sets it up against a more prudent Bank of England.

The bill also cuts down on financial fraud, secures vulnerable people and rural areas access to cash, and introduces rules for the use of stack coins, a type of cryptocurrency, for payments.

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

The UK Payment Systems Regulator will have powers to reimburse 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 to promote the global competitiveness of the financial sector, a requirement many regulators around the world are already facing.

Nevertheless, some legislators fear that this may signal a return to the type of light-touch regulation that ended with the banks being rescued in the financial crisis. Zahawi said the new goal would be “unambiguous” secondary to maintaining financial stability and protecting consumers.

Part of the bill moves laws inherited from the EU to the rule books of British regulators, which makes it easier to change them in the future, but also gives the watchdogs far more influence at the expense of parliament.

As a counterweight, the Ministry of Finance had flagged that it could give itself “call-in” powers to ask regulators to review a rule, if they thought it would be in the public interest.

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

Zahawi said summoning forces 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, CEO of the London Market Group, which represents the insurance market, said the new financial services bill would increase the sector only if the competitiveness target of regulators had real teeth.

“The bill must absolutely contain sufficient details on how regulators will be held accountable in the issue of competitiveness, otherwise it will not achieve the regulatory culture change we need, and there will only be words on one side,” Wagstaff said.

Vincent Keaveny, Lord Mayor of the City of London, said there is a need for a clear commitment to set out how regulators will focus more on competitiveness, but a “regulatory fire” will damage the sector’s international reputation.

A government-sponsored review on Tuesday gave recommendations to speed up how listed companies can use markets for additional funding, and Zahawi said everyone has been accepted by the government. read more

A new working group for digitization, led by former HSBC leader Douglas Flint, will modernize the ownership of shares 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 around them, Zahawi said.

The first annual “State of the Sector” is published on Wednesday to confirm the government’s “vision for the sector”.

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

Our standards: Thomson Reuters Trust Principles.

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