UK financial sector seeks stronger accountability of regulators

A new sector-wide body could help ensure that Britain’s financial regulators fully comply with their new remit of aiding international competitiveness when writing rules, an industry lobby group said on Thursday.

Tougher competition in financial services – including from the European Union following Brexit, and from New York attracting UK company listings, has prompted the UK government to set out a welter of reforms to boost capital markets.

This included giving the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority a competitiveness objective.

Industry is sceptical, however, that it will be fully applied when the planned reforms are being introduced, concerns the regulators have sought to dispel.

TheCityUK, which promotes the UK financial sector abroad, said that, after an initial rejection from government, one should revisit a proposal to form a new body to help scrutinise whether the FCA and PRA are applying the new remit.

There appears to be a growing political consensus that some type of external body is required to provide expertise and a long-term strategic view on regulatory performance, TheCityUK said in a report in conjunction with law firm Freshfields on Thursday.

Bruce Carnegie-Brown, chair of TheCityUK’s leadership council and chair of Lloyd’s of London insurance market, said the report calls for regulators to recognise their role in supporting Britain’s international competitiveness.

“What we need is efficiency, proportionality, and an understanding of the strengths and weaknesses in the context of an increasing number of global competitors,” Carnegie-Brown said.

Bim Afolami, Britain’s financial services minister, said regulators have a “vital role” to play in facilitating the international competitiveness of the UK economy.

“I strongly welcome today’s report from TheCityUK and Freshfields which will help us benchmark and build on our performance,” Afolami said.