On Tuesday, the Finance Minister of Britain, Nadhim Zahawi said that the financial regulators in the country would have to focus on promoting the global competitiveness of the financial sector. However, he added that a plan aimed at introducing more government oversight in the sector had been paused for now.
Bill to be introduced
The Finance Minister also confirmed that Wednesday would see a long-awaited bill applicable to financial markets and services be introduced in the parliament. He said that the legislation was aimed at taking advantage of the benefits offered by Brexit and transforming the financial services sector of the United Kingdom.
There has been a rising demand for quick reforms by bankers in order to boost the attractiveness of London as a global hub for finance, since the departure of Britain from the European Union. London was replaced by Amsterdam as the leading share trading center of Europe, which has driven Britain into easing its listing rules in order to convince Arm, the chip designer, to list in London.
According to Zahawi, the bill cuts down ‘excessive’ capital buffers for infrastructure investment and would help in unlocking billions of pounds. However, this step would pit it directly against the Bank of England (BoE), which has become quite cautious.
Aims of the bill
Financial scams are also one of the areas where the bill aims to focus in order to ensure that access to cash can be granted to rural areas and vulnerable people. Moreover, it also comprises rules that would apply to stablecoins, which refer to digital assets that are pegged to a fiat currency or another asset, for payment purposes.
Speaking at the annual City of London dinner at Mansion House, Zahawi said that the legislation would protect consumers and provide compensation to scam victims, while also giving access to cash to millions of people. The power of reimbursing the scam victims would be granted to the Payments Systems Regulator.
A secondary objective would also be given to the Financial Conduct Authority (FCA) and the Bank of England for promoting the financial sector’s global competitiveness, which many regulatory authorities in the world are required to do.
However, lawmakers have some misgivings about the bill because they believe it can lead to light-touch regulation that saw banks having to be bailed out during the financial crisis. According to Zahawi, these new objectives would be secondary to consumer protection and maintaining financial stability.
There is also a part of the bill that transfers the laws inherited from the European Union to British regulators’ rulebooks, which can make future amendments easier. But, this would mean that watchdogs would have a lot more influence, as opposed to the parliament.
In order to balance this out, the finance ministry has said that could grant the ministry itself with ‘call-in’ powers that can be used for telling regulatory authorities to review a rule. But, lawmakers believe it should be done rarely. In fact, Andrew Bailey, the BoE governor said last week that the independence of Britain’s regulators makes it a global financial center.