LONDON, Feb 27 (Reuters) – The Bank of England said on Monday its new objective to promote the financial sector’s post-Brexit global competitiveness would mean a big change in how it makes rules in the future, starting with easing burdens on smaller lenders.
Britain’s financial sector has been largely cut off from the European Union by Brexit, leaving it facing new competition from EU centres like Amsterdam, Paris and Frankfurt.
In response, the UK has set out reforms to bolster the City of London as a global centre for banks, insurers and asset managers. They include giving the Bank of England and Financial Conduct Authority a new objective to improve the City’s international competitiveness over the medium and longer term, while remaining aligned to international standards.
“This is a big deal. It will make a big difference. We take the new objective seriously. We will make rules differently as a result,” BoE Executive Director Victoria Saporta said in a speech in a BoE Webinar.
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The financial sector, seeking “Brexit dividends”, has been sceptical of regulators’ willingness to embrace their new objective, calling for ways to measure its implementation.
The BoE on Monday also published consultation papers on easing liquidity, disclosure, reporting and remuneration rules for smaller lenders.
“These proposals show how we can use our rule making powers in ways that are good for competitiveness and growth,” said Saporta, responsible for bank and insurance capital at the BoE’s Prudential Regulation Authority (PRA).
The BoE will host a conference in September to explore the links between regulation and international competitiveness, and “appropriate quantitative metrics” which lawmakers can use to measure how the new remit is being implemented, Saporta said.
She cautioned that Britain needs to align with global financial standards setters if it wants to have influence, adding this is something global banks want. She also noted that the United States typically goes further than global norms.
The BoE has already clashed with government over how far to ease insurance rules.
“Making the UK a more attractive place for financial business without lowering standards is a political tightrope – and the PRA finds itself a reluctant safety net,” said Simon Morris, a partner at CMS law firm.
Reporting by Huw Jones,
Editing by Gareth Jones, Ed Osmond and Sharon Singleton
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