Incoming BOE Governor Says ‘Essential’ for U.K. to Write Its Own Rules
U.K. and EU are debating future access for financial services.
(Bloomberg) -- The man about to become Britain’s top central banker said the U.K. should be free to change its own rules, ahead of crucial talks over the country’s future relationship with the European Union.
“It is absolutely essential that we have the capacity to review and adapt the rulebook,” said Andrew Bailey, outgoing chief of the Financial Conduct Authority. He suggested the U.K. could diverge on EU-wide rules such as Solvency II, which covers insurers, and MiFID, which governs investment services.
His comments Wednesday at a parliamentary committee come as the U.K. dives into negotiations with Europe on cross-border financial services. Finance minister Sajid Javid wants a deal that allows permanent access to the EU market, which chief negotiator Michel Barnier has already rejected given the U.K. may diverge from European rules.
Bailey, who starts as Bank of England governor next month, said the EU has hinted that “because we’re near and big, we’re going to be held to a different standard to anybody else” as the two sides negotiate market access. “We don’t know what that adds up to in practice, but I think it’s another reason to be alert and sensitive.”
June Deadline
The U.K. has imposed a deadline of June to obtain so-called equivalence with the EU, a check-list of recognition that would replace the current passporting arrangement that allows businesses unfettered access within the bloc.
Sam Woods, the Bank of England deputy governor for prudential regulation, said he was concerned about the “plain risks” of the EU’s power to withdraw equivalence at short notice. He echoed calls from Governor Mark Carney on Tuesday for something “more durable” than the current 30-day notice period, adding that two or three years is more usual.
Woods recognized the risk that politicians could disregard the technocratic policy arguments on allowing the U.K. market access. “I do think a negative decision based on technical advice to the contrary would say a very big thing about how the EU approaches equivalence to the rest of the world,” he said.
To contact the reporter on this story: Viren Vaghela in London at vvaghela1@bloomberg.net
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Keith Campbell
©2020 Bloomberg L.P.