UK lawmakers tell Reuters to respect independence of financial watchdogs

By the hand of Huw Jones

LONDON (Reuters) – The UK Treasury should avoid whitewashing the independence of financial regulators by overburdening it with demands to change post-Brexit rules, UK lawmakers said on Tuesday.

After leaving the European Union in full at the end of December, Britain can now write down its financial rules as it seeks to tighten competitiveness in London as a leading global financial center.

Some shareholder groups have suggested that this could lead to lower standards, but a report by Parliament’s elected Finance Committee on Tuesday said regulators independent of political interference should be a key element of UK financial services regulation.

“The Commission does not believe that there is strong evidence for the legislature that ministers have a full right to see the regulatory policy proposals consulted before publication,” the report says.

“Regulators should be free to choose what they share with the Treasury.”

A call by some lawmakers to impose a broad requirement on regulators to take into account the global competitiveness of the city, when regulatory rules have made little progress.

Instead, the Ministry now has the power to require the Financial Conduct Authority, if necessary, to “take into account” certain factors such as competitiveness or climate change when designing rules for a specific activity.

“But the government should be confronted with its approach,” the report says, adding that these requests already force regulators to choose which factors to prioritize.

The UK has incorporated rules inherited from the EU into UK law and supports the intention to change the report to the FCA rule books, meaning that time to change the law would not be necessary for future adjustments, and would allow regulators to respond honestly to market developments.