On this side of the Channel the pace of reform in the finance industry has so far been leisurely.
While dual-class share structures and lower free float requirements have been introduced in an attempt to boost London’s somewhat beleaguered stock market, hopes have not been realised of a bonfire of EU red tape and second deregulatory “Big Bang”.
James Smethurst, head of financial regulation at City law firm Freshfields Bruckhaus Deringer, says: “We haven’t yet really seen significant or substantial changes to UK regulations given that we’re now free to change the European rules.”
The Government is only now redoubling its efforts into overhauling centrepieces of EU-era regulation, such as the Solvency 2 and Mifid 2 rulebooks. The former, which was introduced in 2016 and forces insurers to hold vast sums of money on their balance sheets, is likely to be overhauled following a consultation in April.
In a speech on Monday, John Glen, the economic secretary to the Treasury, outlined plans to reform Solvency 2, including an up to 70pc reduction in the risk margin and increased investment flexibility.
“EU regulation doesn’t work for us anymore,” said Glen. “We have a genuine opportunity to maintain and grow an innovative and vibrant insurance sector while protecting policyholders and making it easier for insurance firms to use long-term capital to unlock growth.”
The Government expects the reforms to result in “tens of billions of pounds” for long-term investments. It comes after pension funds and insurance chiefs met with Boris Johnson and Rishi Sunak in November.
For years, insurers have argued that relaxing the rulebook could free up billions of pounds on their balance sheets, which could then be ploughed into the broader economy – complementing the Government’s “levelling up” agenda.
Sir Nigel Wilson, chief executive of Legal & General, says his firm has invested over £30bn in UK towns and cities over the last decade, but the country badly needs more investment in modern infrastructure such as renewable energy projects.