Full Brexit has yet to happen on UK finance, say lawmakers

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The City of London’s financial district can be seen as people walk along the south side of the River Thames amid the coronavirus disease (COVID-19) outbreak in London, Britain, March 19 2021. REUTERS/Henry Nicholls

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LONDON, June 23 (Reuters) – Britain should avoid major and hasty reforms to make its financial sector more globally competitive after Brexit splits industry from the European Union, said on Thursday. a parliamentary report.

The Department of Finance has proposed dozens of changes to rules governing capital markets, company listings and insurance to exploit independence from EU regulation and create an opportunity for Britain to innovate. Legislation is expected this year.

The outlook for the “resilient” financial sector “appears relatively positive”, given that far fewer financial jobs than expected have been transferred to the EU, the House of Lords’ European Affairs Committee said in its report.

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But committee chairman Charles Hay said: ‘You should be a bit careful because there’s still a lot to play in there.’

Britain is proposing to give regulators a secondary goal of helping the financial sector be competitive, but Hay said the committee is asking the government to explain exactly how that would work in practice.

A separate parliamentary report last week declined to back the target, saying it risked undermining standards. Read more

Bankers have called on the government to speed up reform, but Hay said getting the sequencing right was key to reaching the “new place” for a sector which accounts for 10% of total UK tax revenue.

“More important than speed is the final answer, because if you rush and do the wrong thing, you’ll damage something very valuable,” Hay said, describing the report.

Britain’s relationship with the EU is strained, with Britain’s clearinghouse access to the bloc due to end in three years. A row over Northern Ireland has frozen a new forum for financial regulatory cooperation between Britain and the EU. Read more

While the government would be unwise to bet on ‘unlikely’ future access to the EU for British finance, it would have to weigh the benefits of deviating from the rules it inherited from the bloc and thereby imposing new costs on companies, according to the report.

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Reporting by Huw Jones; Editing by Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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