Blog: Bank of England admits Brexit makes City easier to regulate – The Telegraph

The Bank of England has admitted that Brexit is making the City easier to regulate despite issuing warnings against the Government’s plan to axe swathes of red tape. 

Senior Threadneedle Street officials told the Treasury committee on Tuesday that leaving the bloc has been good for competition and for the overall safety of the UK financial services industry. 

Vicky Saporta, executive director at the Bank, said: “Leaving the EU produces opportunities for us to manage our financial system in a way that’s more appropriate.

“We can tailor things to UK circumstances to facilitate competition and competitiveness but also, given that we have a massive financial system in a medium sized economy, we can be flexible when we see risks arising and not be constrained by a harmonised [EU] system.”

The comments came despite the Bank being locked in a tussle with the City and Treasury over the speed and scope of post-Brexit rule changes.

On Monday, Andrew Bailey, the Governor of the Bank, warned that post-Brexit reforms in the insurance industry will increase the risk of firms going bust and potentially leave taxpayers with a multi-billion pound bill. 

Meanwhile, Sam Woods, head of the Bank’s Prudential Regulation Authority (PRA), hit out against the bankers’ bonus cap, saying: “The only effect of the cap is to increase the fixed pay of bankers…it’s a completely crazy system.”

The regulator is in the process of removing the cap after former chancellor Kwasi Kwarteng announced it would be scrapped in his ill-fated “mini-Budget”. 

Mr Woods also said that banks are unlikely to need to hold a bespoke cash buffer to cover the fallout from climate change.

He said: “There might be a question that in order to capture climate risks… might you need a new slab of capital to deal with climate risks? I have become more sceptical about that proposition through time.”

Separately, the European Banking Authority, which writes the rulebook enforced by the European Central Bank, called for a crackdown on lenders in the bloc flouting gender diversity rules. 

The EBA said that more than a quarter of nearly 800 European banks and investment companies it reviewed were ignoring diversity policies introduced in 2014, including setting targets to increase female representation in leadership positions. 

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