Bank of England says easing rules for small lenders shows ‘competitiveness’
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THE Bank of England (BOE) on Monday (Feb 27) said 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 (EU) by Brexit, leaving it to face new competition from EU financial centres such as Amsterdam, Paris and Frankfurt.
In response, the United Kingdom has set out reforms to bolster the City of London as a global centre for banks, insurers and asset managers. These include giving the BOE and Financial Conduct Authority a new objective to improve the City’s international competitiveness over the medium term and longer, 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,” the central bank’s executive director, Victoria Saporta, said during a webinar.
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.
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“These proposals show how we can use our rule-making powers in ways that are good for competitiveness and growth,” said Saporta, who is responsible for bank and insurance capital at the BOE’s Prudential Regulation Authority (PRA).
The central bank will host a conference in September to explore the links between regulation and international competitiveness, as well as “appropriate quantitative metrics” which lawmakers can use to measure how the new remit is being implemented, she added.
She cautioned that Britain needs to align with global financial standard-setters if it wants to have influence, adding that this is something global banks want. She also noted that the United States typically goes further than global norms.
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The BOE has already clashed with the 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 law firm CMS. REUTERS
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