A senior official from Britain’s insurance sector on Wednesday laid out the case for selective divergence from EU rules to add to London’s appeal as a competitive global financial center.
Britain left the European Union on Jan. 31 and will have full freedom to write its own rules for banks, asset managers and insurers once a transition period ends on Dec. 31.
The financial services sector is Britain’s biggest tax contributor, generating 75.5 billion pounds ($98 billion) annually in tax.
Julian Adams, director of public policy and regulation at insurer M&G, said some wholesale market rules inherited from the EU could be amended as professional investors need less protection than retail customers.
“One of the areas I would be focusing attention on here is the distinction between retail and wholesale,” Adams told the House of Lords’ sub-committee on EU financial affairs.
Taking a different approach for the wholesale market, which includes dealings between banks, exchanges and asset managers, could promote the international competitiveness of London as a place to do business, Adams said.
Adams, a former senior Bank of England regulator, cited some of the EU’s capital rules for insurers as an example for changes.
Britain and the EU this week set out their approaches to trade talks. Access to the bloc’s financial market would be based on alignment of regulation under an EU system known as equivalence.
Equivalence covers about 40 different financial activities.
Adams, also deputy chair of the Association of British Insurers, said there was a strong case for not requesting equivalence in every activity.
Britain will be faced with trade-offs between protection of investors and keeping London competitive, he said.
Other officials, however, for instance from the banking sector say divergence from EU rules could lead to Brussels denying Britain access to the European market.
Miles Celic, chief executive of TheCityUK, which promotes Britain as a financial center, said there was no sector consensus on where Britain could diverge from EU rules.
“It’s important that there is a structure that manages where we align and diverge,” Celic told the lawmakers who are looking at financial rule-making after Brexit.
Catherine McGuiness, leader of the City of London financial district, said on Tuesday there was no big demand in the sector to row back on regulation. ($1 = 0.7698 pounds)
(Reporting by Huw Jones; editing by Barbara Lewis)
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