The Treasury plans to transform the role of financial regulators to ensure that they promote the city’s global competitiveness.
Last year, the Treasury launched a consultation on how the role of financial regulators should adapt once the UK leaves the EU. With the Treasury now planning to respond to the report in the fall, ministers have hinted that financial regulators may be required to factor Britain’s global position in the financial services sector into policy decisions.
“Now that we have left the EU, it is right that we consider how the regulatory framework has to adapt to be suitable for the future,” said a spokesperson for the Treasury.
“We are working closely with the FCA and PRA to ensure that the UK remains an open, green and technologically advanced financial services sector, based on high regulatory standards. We are reviewing the responses to our consultation and will be releasing a second consultation in the fall, ”they confirmed.
It comes after City Minister John Glen told financial services firms that regulators need to wake up and “smell the coffee” on their role in making the sector more competitive. In a private meeting, Glen called for a “reset” of the “relationship between the Treasury, Parliament and our regulators,” the Times first reported.
According to the Times, the Treasury could make competitiveness an official part of the mandate of UK regulators.
One option being considered is to make competitiveness a legal requirement for regulators such as the Financial Conduct Authority and the Prudential Regulation Authority, which means that regulators should take these concerns into account in policymaking.
A less drastic approach could see competitiveness introduce a secondary regulatory principle, behind consumer protection and fairness.
Businesses in the city have lobbied the government to make competitiveness a goal for regulators as the UK’s financial services sector loses business to financial capitals in Europe and the US, with Amsterdam overtaking London as the continent’s largest equity trading center in January.
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