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Bailey opposes Treasury plot to overrule financial regulators | Business News

The Governor of the Bank of England is opposing a plan drawn up by the Treasury that would allow ministers to repeal financial surveillance in key areas of city regulation.

Sky News has learned that Andrew Bailey has expressed dissatisfaction with a so-called ‘call-in power’ that will be included in financial services and market bills due to be launched this year.

The clause, which is designed to invite only those situations where ministers believe it would be in Britain’s national interest to intervene, has sparked tensions between the Treasury and banks, according to a City executive who was briefed on the matter.

Mr Bailey believes the existence of a call-in power would weaken the bank’s perceptions of independence, although the bill would have no effect on its interest rate setting autonomy.

An ally of the governor said the issue could still be resolved amicably but that Mr Bailey’s situation would require “more reassurance” about the new system.

The new power to repeal the Prudential Regulatory Authority (PRA) will be kept in reserve, similar to the Treasury’s ability to ‘electrify’ ring-fences introduced in 2019 to protect depositors in Britain’s major retail banks.

According to a source, it will rarely be used.

If it is called for, any attempt to overturn the regulators’ decision would require parliamentary approval, they added.

An example of where new call-in power can be introduced is related to the reform of the solvency-II insurance industry that is being created by the Treasury, but which is being met with some resistance from the PRA.

Ministers have promised that the overhaul will clear billions of pounds for insurers to invest in UK infrastructure projects.

During a meeting this week, however, insurance executives told Sage Sunak, Chancellor and John Glenn, City Minister, that they were concerned about the PRA’s attitude toward reform.

The Financial Times later reported that Boris Johnson expressed similar discomfort.

Mr Sunak is expected to detail the new bill in his annual Mansion House speech later this month, as the Treasury seeks to accelerate changes to the City Rulesbook that could pay off post-Brexit ‘dividends’.

Unveiled in the Queen’s speech in May, the most prominent elements of the bill were welcomed by the Treasury involving a pledge to preserve cash access; Repeal the EU Financial Services Act and replace it with a UK-centric approach; And to update the objectives of industry regulators, including the Financial Conduct Authority, to include economic growth and international competitiveness.

The amendments to Watchdogs’ motives have been criticized by critics who argue that the focus on competitiveness reduces the primary responsibility to promote financial stability.

The bill includes reforms to regulate UK capital markets to promote investment, as well as new protections for consumers who fall victim to scams.

Speaking at the unveiling of the bill, Mr Glenn said: “We are reforming our financial services sector. Now we have left the EU so that it works in the interests of communities and citizens, creating jobs, supporting businesses and growing across the UK.” In May.

However, there are no immediate plans to repeal aspects of EU-wide legislation, such as the bonus cap, which has made the removal of restrictions on bankers’ salaries politically unpopular due to the cost of living.

The Bank of England declined to comment on Saturday when the Treasury said: “As announced in the Queen’s speech, the forthcoming Financial Services and Markets Bill will enhance our position as a global leader in financial services, capitalizing on the benefits of Brexit. Promotes that encourages investment for individuals and businesses.

The bill will be raised if Parliamentary time allows.

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