Brexit is not an opportunity to turn the City of London into “Singapore on the Thames”, warned an influential group of MPs Rishi Sunak.
In a new report on the future of financial services regulation, the Finance Ministry’s selection committee warned that leaving the UK should not be used to trigger “immediate or dramatic changes” in UK financial services regulation.
The report said: “Lust should respect the principle of regulatory independence and should not put pressure on regulators to weaken or lower regulatory standards.
“We will remain vigilant for any evidence that regulators are under undue pressure from the Ministry of Finance to inappropriately weaken regulatory standards.
The warning comes as Mr Sunak, the chancellor, seeks to repeal EU-era regulations in the financial services industry in a bid to make the square mile more competitive.
The government is introducing a new bill on financial services and markets, which was announced in the Queen’s speech last month, in order to “cut red tape in the financial sector”.
The Finance Ministry’s selection committee acknowledged in its report that Brexit provides opportunities to reduce regulatory burdens without lowering standards.
Following Britain’s exit from the EU, ministers have announced plans to abandon controversial insolvency II rules governing insurers and have already revised London’s listing rules.
Mel Stride, chairman of the Finance Committee, said: “The financial services sector is at a turning point, with regulators taking on new powers following the UK’s exit from the EU.
“While it is vital that regulators do not rely on inappropriate dilution of regulations … there are probably real opportunities to reduce the regulatory burden without weakening standards.
The FCA and PRA must have a “secondary goal” of promoting long-term economic growth and must also consider how to improve engagement with the poorest consumers, the report said.
But MEPs said competitiveness should not be the “main goal” of regulators such as the Financial Conduct Authority and the Bank of England’s Prudential Regulatory Authority.
Mr Stride said: “It is also important that regulators aim to boost growth, not only in the financial services sector, but also in the wider economy.”
The report also hit the FCA for being too slow to authorize companies, saying the delay halted the progress of the fintech and crypto asset business.
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