The chair of the Financial Conduct Authority today said that the City regulator will not engage in a “race to the bottom” after Brexit in a bid to preserve the UK’s position among global financial centres.
Charles Randell said calls for deregulation from some quarters of the financial sector show that “some memories are beginning to fade” from the financial crisis.
The FCA has committed to review its regulations after Brexit when changes to regulation from leaving the EU have become clearer. However, Randell dismissed calls for regulation to be based on “competitiveness”.
His comments, made at a London conference run by the Association for Financial Markets in Europe, a group representing investment banks, come amid calls from some members of the Conservative party to cut back regulation.
A report on the post-Brexit trade relationship by the Institute of Economic Affairs – which has been praised by multiple senior Tory MPs – called for “improving the way regulations are made to better support competitive markets”, calling EU regulations a “major threat to the UK economy”.
Boris Johnson, the former foreign secretary who is widely considered to be eyeing a leadership bid against Prime Minister Theresa May, recently wrote that EU regulation may in future be "expressly designed" to hinder British firms.
However, Randell said international regulation is not a “zero sum game”, saying the FCA will “redouble” engagement with EU colleagues after Brexit in a bid to keep its place at the top table of global regulation.
“The FCA does not see the UK’s withdrawal from the European Union as an opportunity to join a race to the bottom in regulatory standards – quite the contrary,” he said.
Randell, a former top corporate finance lawyer who took up office in April, compared the cycle of regulation and deregulation to the myth of Sisyphus, the king condemned to endlessly roll a boulder up a hill, only for it to roll back down again when he neared the top.
"After each crisis, we bring in a weight of new regulation. We push it up the hill to implementation. And then we deregulate. And then a new crisis starts the process all over again."
Pursuing an agenda of boosting the UK’s financial services sector would “imply some very difficult trade-offs with our other objectives”, such as protecting consumers, Randell added.