London may lose competitive edge under planned future regulatory regime

The UK’s Financial Services Authority’s (FSA) remit has been to consider the City’s role as an international hub for financial services. But this obligation has been scrapped in government proposals to share industry regulation between the Bank of England and two new bodies: the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).

Nick Lowe, the IUA’s director of government affairs, said: “Overall the emphasis of proposals outlined by HM Treasury is on preventing financial crises and managing systemic risk. This is, of course, a vitally important objective, but it is disappointing that there appears to be no consideration given to maintaining London’s pre-eminent position in the international financial services sector.

“Competition in our industry is as fierce as ever and unless London remains an innovative and efficient place to do business there is always a danger of it losing out to other financial centres around the world.”

hide

The Treasury’s consultation paper A new approach to financial regulation also outlines how the PRA will be the main regulator for insurers including wholesale insurance business. The FCA will also have a part to play, the proposals reveal.

“Our member companies are still concerned about the possibility of duplication of regulation with two separate supervisory bodies,” added Mr Lowe. “We will have to consider how these two authorities operate in practice, but clearly there must be close cooperation between the regulators.

The IUA will be canvassing its 40 member companies for opinions on the consultation process and submitting a full response to HM Treasury in the next few weeks.