Proposed new regulatory rules have come under criticism by Sir Howard Davies, the former head of UK regulator the Financial Services Authority, and the current chairman of NatWest Group.
The Treasury is planning for force regulators at the Bank of England and Financial Conduct Authority to consider how regulation may impact the way UK-based banks and other financial firms compete with international rivals.
The emphasis on competitiveness is part of the new Financial Services and Markets Bill, which is an attempt by the government to overhaul the City’s regulatory regime in the wake of Brexit.
Caroline Wagstaff, CEO of the London Market Group, has previously welcomed the competitiveness objective for regulators, but has also gone on record, voicing concerns about a possible lack of detail and worry about how the regulators are going to be asked to be held to account on the objective.
Now, according to The Guardian, Davies told an internal meeting of NatWest staff he was worried that “to give the regulator the objective of promoting competitiveness, could be the thin end of a rather peculiar wedge”.
“I mean, why would … the regulators not come in and tell us to cut our cost-income ratio? That would improve our competitiveness. And if they had a competitiveness objective, it seems that would give them an ‘in’ to the way we run our business, which I think would be a bit tricky, really, and that is one reason why the regulators aren’t really keen on it either.”
He claimed the ministers were talking about the new competition rules as one of the “supposed benefits of Brexit”.
“It’s something which is driven by this notion that we must be able to identify some things that we have done which we wouldn’t have done [without] Brexit. It’s not a great place to start in my view to think about how you best regulate a financial sector and that’s all I’ll say on that,” he told staff.