Deregulation Pressure Rises As FCA Chief Bailey Eyes Post-Brexit Change

The Portcullis House event took place on the same day chief executive of the Financial Conduct Authority (FCA) Andrew Bailey delivered a speech outlining how the UK could develop a "lower burden" and "outcome-focused" regulatory regime post Brexit.

FCA devotes more than 300,000 man-hours to Brexit

However, Bailey said any change in approach to regulation would not seek to completely scrap existing rules and the regulator would favour equivalence with global standards, while legal experts say sweeping deregulation is unlikely.

Speaking at the Westminster event, ex-HSBC employee Bim Afolami, the MP for Hitchin and Harpenden, described how some "unnecessary regulation" post Global Financial Crisis has hampered competitiveness in the City, as well as creating "costs not just for institutions but for the individual buyers of services". 

Afolami said: "As we look to a post-Brexit future we should seriously consider how [UK law] needs to be changed or amended to make sure regulators... keep the UK's global competitiveness at the forefront of their minds, as well as safety and resilience.

"The changes that will come will not be good changes unless the people in this room make a particular effort to shape and guide what the British Government does over the next couple of years in this area."

Panellist and senior economist at the Institute of Economic Affairs Catherine McBride added: "Much of the regulation we now have does not come from the FCA. It comes from the G20. It is then brought into the EU, reworked and given to our regulator, which has gold-plated a lot of it.

"When we leave the EU, the FCA should look at what it is trying to achieve with regulation and whether it is actually working, and how it is affecting the rest of the economy."

Other panellists highlighted the well-documented issues with MiFID II, which has "brought a wrecking ball" to the research market, particularly with regard to the quality of analyst coverage in the small- and mid-cap space.

FCA eyes greater investor access to international funds post-Brexit

Widespread deregulation unlikely

However, when confronted by an FCA employee in attendance, not one of the panellists had a riposte for his reminder that the regulator has repeatedly indicated it has no appetite for wide-sweeping deregulation of the City.

Commenting on Bailey's speech, partner at law firm Eversheds Sutherland Andrew Henderson said a regulatory race to the bottom is unlikely and "in some areas the UK may actually think that now it is free of some rather lax EU financial regulations it could impose stricter standards".

Henderson explained the "outcome-focused" regulator would "in theory" emphasise the "application of what a particular standard achieves, rather than focusing on the content of the standard".