LONDON (Reuters) – Britain’s departure from the European Union is a “remarkable opportunity” to make financial rules more competitive to keep the City of London ahead of global rivals after Brexit, a cross-party parliamentary report said on Wednesday.
The All-Party Parliamentary Group (APPG) on financial services said that for Britain’s 130-billion pound financial sector to stand any hope of remaining ahead of the “chasing pack”, it must stay globally competitive.
Leaving the EU means financial rules will in future be drafted nationally, making UK regulators far more powerful, which requires tighter parliamentary scrutiny and guidance, the report said.
“This could mean ensuring global competitiveness is embedded in the general principles set for the sector’s regulators, while at the same time retaining oversight to ensure the highest possible standards are maintained,” the report said.
The overnight shift in euro share and swaps trading from London to Amsterdam and New York at the start of the year rang alarm bells among lawmakers, some of whom set up a new CityUnited think tank this week to push for a regulatory fightback.
But the Bank of England has said overarching “competitiveness” should not be one of its core objectives, while governor Andrew Bailey said the City should not be an “anything goes” financial centre.
The APPG report, which feeds into a finance ministry consultation on regulation after Brexit, said parliament should play a more forensic role in scrutinising watchdogs.
Brexit allows Britain to differ its treatment of retail and wholesale financial markets, the latter crucial to competing with a small number of global centres, it said.
It should be for parliament and not the regulators to help decide if it was worth aligning with EU financial rules in return for market access, it said.
So far Brussels has granted only limited, temporary access, saying it wants Britain to spell out its intentions to diverge from the bloc’s rules.
Reporting by Huw Jones; Editing by Kirsten Donovan