Hunt to unveil post-Brexit Big Bang 2.0 for UK financial services industry

Jeremy Hunt will finally unveil the government’s plans to shred EU financial services laws today as he proposes a package to boost the City’s global competitiveness post-Brexit.

Hunt will deliver the landmark announcement in Edinburgh this morning, with the chancellor set to drop Solvency II capital requirements on insurance firms and ease current bank ring-fencing laws.

The Treasury last night said more than 30 regulations would be changed as a part of the package, now dubbed the “Edinburgh reforms”, which Hunt said would “unleash the full potential of our formidable financial services sector”.

The so-called Big Bang 2.0 proposals – a phrase first canned by Rishi Sunak nearly two years ago – have long been touted by Leavers as one of the biggest potential benefits of Brexit.

“We are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people,” Hunt will say.

It is also expected that the chancellor will announce a review of the EU’s wide-ranging MiFID II regulatory regime.

Hunt will also tomorrow set out plans to reshape the UK banking regime in a bid to unshackle the sector after the government tightened rules to prevent mistakes that led to the financial crisis from happening again in the future.

Lenders will be able to link their investment and retail banking arms, Hunt will say, though it is unclear whether big players such as Barclays and HSBC will still need to partially separate, or “ring fence”, the two.

The policy was designed to stop investment errors from trickling down to the real economy, as they did over a decade ago, via consumer banking businesses.

Critics have argued it has kept cash locked up in the financial system that could have been unleashed to boost business investment and economic growth.

David Postings, chief executive of banking lobby group UK Finance, told Morning Wire the financial services industry “is the engine of our economy,” adding “ensuring the sector remains strong and internationally competitive is essential”.

Hunt is set to overhaul the purpose of the City’s regulators in a bid to push growth and competitiveness up the agenda, with new mandates for both the Financial Conduct Authority and Prudential Regulation Authority to be detailed as part of the package.

Suggestion of a shake-up of the City regulators has caused some disquiet in recent months amid fears the UK’s status as a global financial hub will be threatened.

However, Mark Austin, Freshfields partner and author of a major review designed to boost the UK’s capital markets, told Morning Wire that tweaking the watchdogs’ mandate today was a “welcome and foresighted move.”

The so-called Big Bang 2.0 proposals – a phrase first coined by Rishi Sunak in a Morning Wire interview nearly two years ago – have long been touted by Leavers as one of the biggest potential benefits of Brexit.