The UK's exit from the European Union will not lead to "heavy deregulation", even if no deal is reached on the terms of the departure, according to Stephen Barclay, economic secretary to HM Treasury.
Mr Barclay, whose role includes responsibility for the City of London told the European Union Affairs committee of parliament, said other EU member states feared a so-called “hard Brexit”, where no deal is agreed, would lead to significant deregulation of the UK’s financial services sector.
But Mr Barclay said he has reassured those nations that there won’t be significant changes, whether a deal is reached with the European Union or not.
He said the financial services industry has not pushed him to significantly loosen regulation.
Mr Barclay said: "The current regulatory framework has not hindered the competitiveness of the City of London, and the US has stricter regulation than the UK and it doesn’t seem to have hindered them."
He said many regulations, such as Basel, need not be affected by the UK's exit from the European Union.
Basel is a global, voluntary regulatory framework on bank capital adequacy, stress testing, and market liquidity risk.
Mr Barclay said he expects a deal to be struck with the European Union, and that the UK’s regulatory environment will allow it to be flexible in areas such as Fintech yet meet “international standards” that he feels can be the basis of a wide-ranging deal between the EU and the UK.
Mr Barclay advocated a vote to leave the EU when the referendum happened on 23 June 2016.
Mr Barclay's comments echo those of the Financial Conduct Authority’s Christopher Woolard, who has warned firms in the financial services sector that a “bonfire of regulations” after Brexit would not be in their interests.
Speaking to the House of Lords European Union justice sub-committee back in October, the FCA’s executive director of strategy and competition said many standards were now set globally.
Mr Woolard dispelled the idea that post-Brexit Britain could attract business by slashing its regulatory burden.
He said: "This is an international system we are talking about here. If you look at where the majority of business is done, it is in pretty rough enforcement jurisdictions.
"What looks like a good plan to deregulate in certain circumstances comes back to bite people years later when the compensation scheme kicks in.
“This is a system of international standards where money tends to have a flight to quality."
david.thorpe@ft.com
