Weakening the independence of regulators would undermine reforms to bolster Britain’s finance industry, the head of the Bank of England said on Thursday, in a rebuff to proposals from the leading candidate to be the country’s next prime minister.
The Conservative government proposed a welter of reforms last month in a bill to boost London’s appeal to global investors in the wake of Brexit, increase investments by insurers in infrastructure, and regulate some cryptoassets.
On Wednesday, the Financial Times reported that Liz Truss, the front-runner to succeed Boris Johnson as prime minister next month, would add new powers to the bill, giving ministers the ability to override financial regulators like the Bank of England (BoE), if deemed in the public interest.
BoE Governor Andrew Bailey said in a letter to parliament’s Treasury Select Committee that he welcomed the financial services bill as initially proposed, which is intended to “establish a strong, responsive and internationally respected” approach to regulating financial services in Britain.
“Regulatory independence is important, not least because our international standing, and therefore the competitiveness of the UK financial sector which the reforms are aimed at enhancing, depends on it,” Bailey said.
“Anything that would weaken the independence of regulators would undermine the aims of the reforms,” Bailey added in the letter dated July 27 and published by the committee on Thursday.
Bailey said the BoE’s banking regulatory arm would publish a discussion paper next month, setting out the BoE’s vision for implementing the reforms as they currently stand in terms of strong standards, accountability to parliament, stakeholders, and the public at large.