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City watchdogs need more funding to protect financial stability after Brexit, report warns

The watchdogs charged with policing Britain’s financial system need to be beefed up to cope with additional regulatory pressures after Brexit, a report has warned.
Responsibility for a host of financial rules and regulations will transfer from Brussels after Brexit, with the Bank of England, the Treasury and the Financial Conduct Authority (FCA) set to shoulder the burden.
All three should be given extra extra public money to help them adapt, a report by City think tank the International Regulatory Strategy Group (IRSG) has urged. Much more cash will be needed if Britain and the EU fail to agree mutual market access, it added.
The paper, co-authored by law firm Linklaters, also called for an urgent review of the UK’s post-Brexit mix of financial regulation, arguing that resolving regulatory issues is “vital for long-term financial stability”.
While it does not argue for “significant changes” or a “lowering” of standards, the report says the system must be “flexible and adaptive to market needs”.
City watchdogs need more funding to protect financial stability after Brexit, report warns

Office workers in Canary Wharf

Credit:
Doug Armand
The report also called for the Government to consider regulators' powers and how they interact with Parliament, businesses and the public. It said a clear consultation was required and review mechanisms should be established.
Powers will transfer from a range of EU bodies to the UK, including the European Parliament, other member states, the European Council and the European Supervisory Authorities. Among the EU powers being transferred back to the UK are the supervision of credit rating agencies and the handling of regulatory equivalence decisions.
The report also argues City watchdogs will need a much bigger international presence if they want to influence global standards that will “only increase in importance over the coming years”.
While the report recognises these decisions might not be “for day one of Brexit”, it argues the concerns should be resolved swiftly.
Mark Hoban, chair of the IRSG and a former Treasury minister, said: “We believe the system we have is already very good, but it will need to be updated to meet the challenges of Brexit.”
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