A draft financial services and markets bill (FSMB) is before parliament for approval, giving UK financial regulators powers to amend rules inherited from the European Union, reform capital rules for insurers and introduce Britain’s first set of rules for stablecoins.
But lawmakers worried that some provisions, such as requiring regulators to take the City’s competitiveness into account when writing rules, could harm their independence and trigger a “race to the bottom”.
Andrew Griffith, who became financial services and City minister last month, sought to ease these concerns, saying there would be no “bonfire” of rules.
“I have the greatest respect for our independent regulators. They have to do a very difficult job,” Griffith told parliament’s treasury select committee.
Griffith said he did not want ministers interfering in day-to-day regulatory decisions.
But there is need for a “safety valve” to allow ministers to intervene if need be, and would be used “sparingly” and “public policy-led”, Griffith said.
He declined to elaborate on how far the intervention power would go in requiring regulators to review a rule.
This safety valve clause would be introduced to the bill once the ministry finalises the wording in coming weeks, Griffith said.
Prime Minister Liz Truss wants a review of financial regulators, raising expectations of a potential merger of watchdogs, but Griffith said the current regulatory set up would be maintained.
“Yes. That is my belief and desired outcome. I don’t seek disruption… my objective is to build a really good working relationship with the regulator,” Griffith said.
The government intends to scrap all European Union rules on the statue book by the end of 2023 to mark a clean regulatory break with the bloc after Brexit.
Some of the rules would be transferred to UK financial rulebooks, Griffith said.
“There is no desire to sweep everything away,” he said.
“There is no desire to diverge for its own sake,” Griffith added in a reference to moving away from EU rules.
Britain’s finance minister Kwasi Kwarteng has promised to further than the bill this month by unveiling a “Big Bang 2.0” reform.
(Reporting by Huw Jones and Muvija M; editing by William James and Ed Osmond)
By Huw Jones
