U.K. Watchdogs Need Freedom to Rewrite Finance Rules, MPs Warn

(Bloomberg) -- British politicians should stay out the way as regulators overhaul the financial industry's rulebook after Brexit, according to a parliamentary panel.

Watchdogs have “a key role to play in designing and developing the rules” now the U.K. is departing from European Union law, the Treasury Committee said in a report published Tuesday.

The committee said there was no need for extra oversight such as allowing ministers to read regulators' proposals ahead of public consultation, creating a new body to oversee their plans, or enforcing “resource-intensive and impractical” democratic checks on every amendment. Normal scrutiny in parliament should be enough, they said.

“The independence of regulators to be free from political interference is one of the key aspects of U.K. financial services regulation, and it is, arguably, one of the reasons why the U.K. is a world-leading financial center,” said Mel Stride, a Conservative MP who chairs the committee, whose recommendations are influential but not binding on the Treasury.

Ministers have called for greater scrutiny of the Financial Conduct Authority and Prudential Regulation Authority as they turn some four decades of EU legislation into domestic rules, following the U.K.'s split from the bloc at the end of 2020. The watchdogs will also be responsible for implementing government plans to shift away from EU rules such as MiFID II over the coming years, as part of a bid to promote the City of London as Europe's financial hub.

Government and regulators are already in frequent, informal discussions about their policy plans, according to officials cited in the committee's report.