28 February 2023Insurance

Bank of England vows ‘big difference’ in oversight on competition mandate

The Bank of England and the UK’s financial regulator PRA will not play down the import of its new competitiveness directive, but craft a playing field to promote London on the world stage.

"This is a big deal. It will make a big difference," the Bank of England's executive director of Prudential Policy Directorate, Vicky Saporta said at a speech given at the bank.

"We take the new objective seriously. We will make rules differently as a result."

She tips her hat to the louder mantra heard to date that "sustainable growth is impossible without financial stability," but, as perhaps the first in the debate, devoted her full comments to the promise, not the risks, of the competitiveness mandate.

From the sound of it, the key ingredient is "responsible openness," a stance to bring in top foreign players and encourage local risers. That equals "clear expectations for firms wanting to branch into the UK."

Remuneration rules, starting with the bonus cap, may be the first to go, she indicated of ongoing review processes.

Along the way, the competitiveness mandate will mean a thoughtful balance of the benefits of adhering to global standards for the ease of a single playbook and the specific advantages that can be taken by tailoring to UK circumstances.

While Saporta's lead examples of UK-tailored rule tweaking focus on banking, including the Edinburgh reforms and Basel 3.1, Solvency II rules may offer a key area for a local touch.

"There are many areas where we fully agree about the benefits from simplifying the regime to better reflect the needs of the UK."

Further elements include better communication, increased coordination with sister regulatory bodies, a "predictable and stable" rule set and a "dynamic digital regulatory agenda that maintains safety without stifling innovation."

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