LONDON — Liz Truss, the front-runner to become Britain’s next prime minister, will give ministers powers to override financial regulators if they hold back post-Brexit reforms, the Financial Times reported on Wednesday.
Britain’s departure from the European Union allows it to write its own rules for the City of London, one of the world’s biggest financial centers but now largely locked out of the EU and facing competition from Paris, Amsterdam and Frankfurt.
The government unveiled a draft law last month to reform financial rules, including easing insurers’ capital rules known as Solvency II, which were inherited from the EU.
But finance minister Nadhim Zahawi left out a proposal that would allow the finance ministry to “call in” or actually override a regulator, saying he wanted more time to consider the arguments.
The FT said that Truss will “definitely” press ahead with inserting the call-in power into the bill which is now making its way through parliament and due for final approval in 2023.
Truss’s team did not respond to a request for comment.
Insurers say the Bank of England is being too conservative in its plans to free up capital for investing in infrastructure, a view dismissed by the Bank, which says there is also a need to protect policyholders.
BoE Governor Andrew Bailey has warned that independent regulators were central to Britain’s standing as an international financial center.
The new financial services bill already includes a new objective for regulators to maintain UK finance’s international competitiveness.
Truss has also said she wanted to take a look at the BoE’s mandate for containing inflation, which is forecast to hit 13% later this year as the BoE hikes interest rates.
(Reporting by Huw Jones; Editing by Kate Holton)