City groups rally Kwarteng on post-Brexit financial services reforms
City groups are calling for more speed and clarity from the government over proposed changes to the financial services rulebook post-Brexit as the Chancellor comes closer to outlining his plans to unleash the City.
TheCityUK tonight urged the Treasury to bring forward changes to “ensure continued high-quality proportionate regulation”, while UK Finance called for “a sustained focus on maintaining our international competitiveness”.
The Sunday Times reported that Kwarteng will this week announce changes to retained EU regulations on financial services, with the Solvency II directive, which governs the insurance industry, among the first in line to be scrapped.
A Treasury source said the Kwarteng will “announce reforms to financial services regulation to boost growth and UK competitiveness over the coming weeks”.
The government is trying to move quickly on the reforms, after Truss said during her leadership campaign that she will ditch all EU regulation by the end of 2023.
The Financial Services and Markets Bill is currently moving through parliament.
The bill provides a mechanism to replace EU regulations and provides a new directive to force British regulators to consider the City’s growth and competitiveness.
Miles Celic, chief executive of TheCityUK business association group, said the industry’s success “relies on the UK being a well-regulated, open and attractive place to do business”.
“Further financial services reforms will need to complement the ambitions of the Financial Services & Markets Bill, ensure continued high-quality proportionate regulation, and enhance our international competitiveness,” he said.
Brexiteers in the government, including business secretary Jacob Rees-Mogg, have cited easing Solvency II as one of the major advantages of leaving the EU.
The rule forces insurance firms to hold a certain amount of capital in reserve to ensure they can withstand financial market shocks.
The Treasury has estimated that easing it will unleash tens of billions of pounds of investment into the British economy.
A spokesperson from the Phoenix Group said the insurance firm would invest “£40-50bn across the UK”, after Solvency II is eased.
“This can help level-up our communities, help tackle climate change and invest in the businesses of the future, while still upholding high levels of customer protection,” they said.
The Treasury declined to comment.