Sam Woods has spoken at Mansion House on how prudential regulation can contribute to the competitiveness of the UK as a financial centre, and to economic growth. He confirmed PRA’s support for the FSM Bill, saying it strikes a sensible balance between the competing considerations.
He acknowledged the Bill’s requirement that PRA focus more on the competitiveness of the UK as a place to do business – but noted that a credible regulatory framework is a pre-requisite. He said that it is now right to strike a balance that works for the UK and contributes to global financial stability, but said this should be done with care.
He moved on to discuss that regulation must be robust, and that the UK would not want to become a regional centre of offshore finance by “undercooking” regulation. He said a global approach is key, and the UK is already recognised by the IMF as having this, and it now has in place cooperation agreements with over 50 jurisdictions.
He then stressed the importance of regulator independence – while supporting strong accountability. He noted his concern about the rumoured amendment to the FSM Bill that may allow the government to override regulatory decisions simply because it took a different view of the issues involved.
Moving to the necessity for regulation to be proportionate and innovative, he discussed the need to remove unnecessary burdens and reduce barriers to innovators entering the markets.
Finally, he moved to regulatory reform, noting the initiatives to:
- reform Solvency II;
- develop a simpler prudential regime for smaller banks;
- implement Basel 3.1;
- simplify reporting rules;
- review enforcement policies;
- make PRA’s rules more accessible and user-friendly; and
- work to encourage innovation for systemic stablecoins.