Financial services: London introduces a bill to turn the page on the EU

Britain's new finance minister, Nadhim Zahawi, tabled a bill on Wednesday that is supposed to improve the competitiveness of the powerful British financial center by taking advantage of Brexit.

Here are the main points of a text eagerly awaited by the sector and denounced as "irresponsible" deregulation by its opponents.

It has yet to be debated by British parliamentarians.

Detach from the EU

The bill "repeals hundreds of pieces of legislation inherited from the EU to pave the way for a cohesive, agile and internationally respected regime that works in the interest of the British people", according to a government statement.

British financial regulation "will again be decided in the UK, for the UK, by the expert and independent regulators of the UK", had hammered Mr. Zahawi in a speech Tuesday evening.

The minister is in line with his predecessor, Rishi Sunak, candidate to succeed resigning Prime Minister Boris Johnson, who had promised a new "big bang" in the sector after the deregulation of the 1980s.

Regulators under pressure

The bill puts the regulators of the sector, the authority of the markets (FCA) and the Bank of England, under pressure, with in particular increased mechanisms of control of their actions by the Parliament and the Treasury.

In particular, the government will be able to order these bodies to review their regulations when it is in the general interest.

Mr Zahawi indicated that the government was studying the possibility of going further and intervening directly in financial regulation, a prospect that fuels fears of an executive showdown with the Bank of England, whose the managers have recently reiterated their concern for independence.

Growth objective

The text tabled on Wednesday also assigns a secondary objective to regulators: that of promoting the growth and competitiveness of the sector, raising fears that this could distract them from their main mission.

This is only a secondary objective and "we give regulators an unambiguous hierarchy, with financial stability and consumer protection as priorities", however argued Tuesday evening Mr. Zahawi.

Accept stablecoins

The bill also plans to allow certain types of stablecoins, these cryptocurrencies supposed to guarantee parity with the dollar, to be regulated as a method of payment in the United Kingdom.

The British government believes that this is a way to strengthen the country's attractiveness in the crypto-asset sector.

Insurance: reforming Solvency II

The British government had already launched a few months ago the part of the reform relating to insurance companies, hitherto governed by the European directive Solvency II.

London plans in particular to relax capital requirements for companies in the sector, hoping to free up tens of billions of pounds for "green" and infrastructure investments.

Contrasting reactions

The project has for months aroused reservations, even criticism, from NGOs, experts or the parliamentary Treasury committee, who fear that London will go too far in deregulation and who raise the specter of the financial crisis of 2007-2008.

The NGO Positive Money denounced, after Mr. Zahawi's first announcements on Tuesday evening, "an irresponsible deregulation program despite warnings from high-level regulators, including the Governor of the Bank of England", seeing it as "a a sign of the deep links between the Treasury and the financial sector".

Industry professionals applaud and for TheCityUK, one of London's main financial lobbies, it is not a question of deregulation but of updating outdated standards "many of which are also being reviewed by the 'EU'.

The bill is, the organization believes, "an essential element" for London, the second largest financial center in the world behind New York, to maintain its rank, but "neither the British government nor our industry want to see regulation weakened" .