Exclusive: Labour eyes up reform to ‘prescriptive’ EU finance rules

Shadow city minister Tulip Siddiq said she would look to overhaul “prescriptive” EU-era regulation in financial services today as the Labour party mounts an offensive to try and win over the City.

Speaking with City A.M. today, Siddiq said regulatory diversions from the EU could produce “opportunities” for UK financial services and free up the potential of technology in the sector.

“If you look at the needs of the fintech sector, we’ve seen that EU regulation of financial technologies could be overly prescriptive sometimes,” she said.

“So one of the things we’d like to see is a more outcomes based approach because we feel like it would allow our country to protect consumers. And we also feel like that would probably give us a chance to benefit from the gains and productivity that new technologies can bring.”

Labour is in favour of the City regaining its unfettered pre-Brexit access to EU financial markets, which would require Brussels to rule that the UK is remaining within its regulatory orbit on financial services.

This is a designation known as “equivalence”.

The government is expected to soon bring forward a package of measures, which Rishi Sunak has said could start a second “big bang” for the City, which will overhaul retained EU regulations for the City in a bid to boost the UK’s global competitiveness.

Former City Minister John Glen, who recently resigned from his post in protest at Boris Johnson’s leadership, has already announced reforms to Solvency II regulation in a bid to unlock a wave of investment locked up in Britain’s insurance giants.

Labour shadow ministers are also formulating a pitch to win over the City.

Shadow Chancellor Rachel Reeves yesterday hosted a panel to launch its new Start Up Review, City PM understands.

Reeves met with review chair, and former Tory minister, Lord Jim O’Neill to speak about the dearth of patient capital investment in the UK, the role of universities and the UK’s listings regime.

These are expected to be key pillars of the review, which aims  to “explore how to ensure start-ups can thrive and grow in Britain, to boost jobs, investment and economic growth across the country”.

It comes after a series of British tech unicorns in recent years have decided to float in New York over London, including car retailer Cazoo and electric vehicle maker Arrival.