Britain’s Truss backs powers to override financial watchdogs, says FT

Conservative leadership candidate Liz Truss attends a research event, part of the Conservative Party leadership campaign, in Darlington, Britain August 9, 2022. REUTERS/Scott Heppell

LONDON, Aug 10 (Reuters) – Liz Truss, the favorite to become Britain’s next prime minister, would give ministers powers to overrule financial regulators if they stall post-Brexit reforms, the Financial reported on Wednesday Times, after insurers asked for action. .

Britain’s exit from the European Union allows it to write its own rules for the City of London, one of the world’s biggest financial centers but now largely blocked from the EU and facing competition from Paris, Amsterdam and Frankfurt.

The government last month introduced a bill to reform financial rules, including easing capital rules for insurers known as Solvency II, which were inherited from the EU. Read more

Finance Minister Nadhim Zahawi brushed aside a proposal that would allow the finance ministry to “call out” or effectively overrule a regulator, saying he wanted more time to consider arguments.

The FT said Truss would “definitely” go ahead with inserting the recall power into the bill, which is now going through parliament and must be finally passed in 2023. His team did not respond to a single Request for comments.

Insurers have said the Bank of England is being too conservative, holding back capital that could be used to invest in infrastructure. The Bank warns that there is “no free lunch” as borrowers need to be protected. Read more

“As the regulator’s consultation proposal stands at the moment, they would not allow us to free up more capital to invest in UK infrastructure,” Amanda Blanc, chief executive of insurer Aviva ( AV.L ), told reporters on Wednesday .

The EU is also reforming insurance capital rules and is ahead of the UK, which has yet to come up with final proposals.

“Yes, Europe is loosening those rules, they’re planning to do that next year, so it would be great if we could go ahead with that,” Blanc said.

BoE Governor Andrew Bailey has warned that independent regulators were critical to the UK’s position as an international financial centre. Read more

The new Financial Services Bill already includes a new target for regulators to maintain the international competitiveness of UK finance, which some lawmakers fear will mark a return to “light touch” regulation before the financial crisis.

Truss has also said he wanted to take a look at the BoE’s mandate to contain inflation, which is expected to reach 13% later this year as the BoE raises interest rates. Read more

Truss faces former finance minister Rishi Sunak in a September 5 Conservative Party vote to choose a new prime minister.

Reporting by Huw Jones and Carolyn Cohn; Editing by Kate Holton and Philippa Fletcher

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