Britain’s finance ministry flags reforms, defends regulators
March 31, 2022
By Huw Jones and Carolyn Cohn
LONDON (Reuters) – Britain’s finance ministry flagged several reforms on Thursday and defended regulators from criticism they are too slow to license firms, saying flawed applicants must not get through.
The ministry and regulators face pressure to make financial rules more flexible to keep London globally competitive after Britain’s departure from the European Union.
The Financial Conduct Authority has been criticised for being slow in authorising crypto firms as it grapples with an internal revamp and pay structure that has disillusioned some staff.
Financial services minister John Glen said he has a “very high regard” for the leadership at the FCA and its counterpart at the Bank of England, and that some people criticised regulators just because they don’t get what they want.
Glen said he was aware of frustration over licensing waiting times and has told FCA CEO Nikhil Rathi that the complexity of new types of financial firms like crypto means that some thought needs to be given to being more responsive.
Some applicants, however, had no experience of dealing with regulators and needed to recognise they must adhere to high standards, he said.
“Just not responding quickly to a request isn’t necessarily a bad thing if there are underlying flaws in the business model of an applicant,” Glen told a House of Lords committee.
“We should not be looking to be nimble at all costs.”
He faces pressure to use “freedoms” from Brexit and has been been considering rules for sectors like cryptoassets.
Glen said he may comment further next week on crypto, and a consultation paper is due after Easter on reform of the so-called matching adjustment in insurance solvency rules.
Legislation on a new framework for writing financial rules could be brought to parliament imminently, Glen said, which would help regulators respond faster to market changes.
But having a primary, rather than secondary objective for regulators to consider any impact of a proposed rule on the competitiveness of the industry was a “non-starter”, he added.
A change in rules could allow for the growth in Britain of “captives” or licensed in-house insurers set up by corporates looking to cut costs through self-insurance, he said.
“It’s ripe for further work to be done. I hope that we would see that evolution in the way insurance and reinsurance is offered to big corporates,” Glen said.
(Reporting by Huw Jones;Editing by Elaine Hardcastle)