City groups bring Kwarteng together on post-Brexit financial services reforms

Sunday 09 October 2022 19:56

The government is trying to move quickly on reforms, after Truss said during her leadership campaign that she will drop all EU regulation by the end of 2023.

City groups are calling for more speed and clarity from the government on proposed changes to the financial services rulebook after Brexit as the chancellor moves closer to outlining his plans to untie the city.

TheCityUK tonight urged the Treasury to come forward with 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 EU regulations on financial services, with the Solvency II directive, which governs the insurance industry, among the first to be scrapped.

A Treasury source said Kwarteng “will announce reforms to financial services regulation to boost UK growth and competitiveness in the coming weeks.”

The government is trying to move quickly on reforms, after Truss said during her leadership campaign that she will drop all EU regulation by the end of 2023.

The Markets and Financial Services Bill is currently undergoing parliamentary proceedings.

The bill provides a mechanism to replace EU regulations and provides a new directive to force UK regulators to consider the city’s growth and competitiveness.

Miles Celic, chief executive of business association group TheCityUK, said the industry’s success “depends on the UK being a well-regulated, open and attractive place to do business”.

“Further financial services reforms will be needed to complement the ambitions of the Financial Services and Markets Bill, ensure continued high-quality proportionate regulation and enhance our international competitiveness,” he said.

Brexit supporters in government, including business secretary Jacob Rees-Mogg, have cited the easing of Solvency II as one of the main benefits of leaving the EU.

The rule requires insurance companies to keep a certain amount of capital in reserve to ensure they can withstand financial market shocks.

The Treasury has estimated that easing it will trigger tens of billions of pounds of investment in the British economy.

A Phoenix Group spokesman said the insurance company would invest “£40-50bn across the UK”, after Solvency II is eased.

“This can help raise the bar for our communities, help address climate change and invest in the businesses of the future while maintaining high levels of customer protection,” they said.

Treasury declined to comment.

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