Don’t turn London into ‘Singapore-on-Thames’, MPs tell Rishi Sunak
Brexit is not an opportunity to turn the City of London into “Singapore-on-Thames”, an influential group of MPs has warned Rishi Sunak.
In a new report on the future of financial services regulation, the Treasury select committee cautioned that Britain’s departure from the EU should not be used to trigger “instant or dramatic changes” to financial services regulation in the UK.
The report said: “The Treasury should respect the principle of regulatory independence and must not pressure the regulators to weaken or water down regulatory standards.
“We will remain alert for any evidence that regulators are coming under undue pressure from the Treasury to inappropriately weaken regulatory standards.”
The warning comes as Mr Sunak, the Chancellor, moves to roll back EU-era regulation in the financial services industry in a bid to make the Square Mile more competitive.
The Government is bringing forward a new financial services and markets bill, which was announced in last month’s Queen’s Speech, with the aim of “cutting red tape in the financial sector”.
The Treasury select committee admitted in its report that Brexit presents opportunities to lessen regulatory burdens without weakening standards.
Mel Stride, chairman of the Treasury committee, said: “The financial services sector is at a turning point, with regulators taking on new powers following the UK’s exit from the EU.
“While it is vital that regulators are not leant on to inappropriately water down regulations… there are likely to be real opportunities to lessen regulatory burdens without weakening standards.”
The FCA and PRA should have a “secondary objective” to promote long-term economic growth and should also consider how to improve engagement with the poorest consumers, the report said.
But MPs on the committee said competitiveness should not become a “primary objective” of regulators such as the Financial Conduct Authority and the Bank of England’s Prudential Regulatory Authority.
Mr Stride said: “It is also important that the regulators have an objective to promote growth, not just for the financial services sector, but for the wider economy.”
The report also hit out at the FCA for being too slow to authorise companies, saying this foot-dragging was holding back the progress of fintech and crypto asset businesses.
