Jeremy Hunt will vow to axe nearly 100 pieces of “unnecessary, outdated and protectionist” EU legislation this week in a bid to turbocharge Britain’s financial services industry after Brexit.
The Chancellor will also unveil plans to boost pension investment in British business to “increase returns” for savers and “unlock capital for our growth businesses”.
A raft of deregulatory proposals as part of implementing the Government’s so-called Edinburgh Reforms will be announced in his Mansion House speech on Monday.
The Telegraph understands that Mr Hunt will unveil new legislation to support stock market listings; scrap laws inherited from Brussels which require companies to produce “excessive” transparency documents; and disclose pension reforms aimed at encouraging UK retirement funds to invest tens of billions of pounds more in the domestic economy.
A Treasury source said the Chancellor’s speech will focus on “scrapping outdated EU regulations, abolishing protectionist rules inherited from our time in the [bloc] and repealing almost 100 pieces of unnecessary retained EU law”.
The Chancellor is expected to say: “I want to lay out plans to enable our financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for our growth businesses.”
It comes as the City of London continues to struggle, with new data last week showing that floats on the London Stock Exchange (LSE) plunged again during the first six months of the year.
Shares in a newly listed payments company also flopped on its first day of trading in a further blow to London’s capital markets.
Writing in The Telegraph, Andrew Griffith, the City minister, echoed these concerns, saying the UK faces “a challenge” owing to the reduction of domestic listed companies over the last 20 years.
He added: “The Chancellor will reveal more how we will tackle this head-on.
“He will update on our comprehensive programme of reforms to Capital Markets that will make the UK an even more attractive place for firms to start, scale, and grow.”
Mr Hunt wants to make the documents that companies produce when raising capital simpler and more useful to investors.
Following a consultation, he is also set to confirm that the Packaged Retail and Insurance-based Investment Products (PRIIPs), which require companies to hand out information sheets showing customers the risks and expected returns of their products, will be scrapped.
A Treasury source said the EU-era rules have forced companies to produce “excessive transparency documents which have not improved consumer understanding”.
Mr Hunt will also reveal a long-awaited shake-up of the pensions industry, outlining a series of reforms designed to encourage new UK superfunds and drive more investment into British assets.He will also focus on incentives to consolidate existing pension pots to create the scale needed to invest in high-growth companies and other illiquid assets.
Mr Hunt is expected to initiate a process that will push the current 86 local government pension funds into larger investment pools “further and faster”. This will build on work initiated by former Chancellor George Osborne in 2015, and move towards a smaller number of pools in excess of £50bn.
Changes are also expected to the so-called “value for money” pensions framework that the Chancellor worries is currently too focused on fees instead of potential returns.
The Treasury has also been considering the role of master trusts and the Pensions Protection Fund (PPF), which could play a bigger role in consolidating thousands of smaller UK pension pots.
The PPF currently protects people in retirement schemes when their employer goes bust but the pensions lifeboat has consistently delivered higher returns through a diverse investment portfolio. It is understood that Labour is also looking at using the lifeboat to create a pensons superfund by encouraging smaller schemes to fold into the PPF.
Treasury sources insisted that the changes would bear fruit over several years, saying: “This is not going to be a sudden change. If you look at what happened in Canada, it was like over a 20 year period.”
Ministers are understood to be concerned about the relatively low level of capital pension funds are investing in UK assets compared to international peers.
In May, Mr Griffith urged pension funds to embrace a “culture of risk-taking” amid fears that a reluctance to put money in the stock market is holding the economy back.
The Chancellor is also set to reveal a pledge by insurers to invest around 5pc defined contribution pots they manage into startups and infrastructure projects.
A senior executive at one FTSE 100 insurer, who has been involved in the talks with industry officials and Government, said: “We would see this as beneficial both for our investors and the wider economy. We would definitely welcome it and think it would be a positive step.”
Mr Hunt will also confirm that Mifid 2 rules, which force financial companies to separate the cost of investment research from trading expenses, will be scrapped following a review by Rachel Kent, a senior City lawyer.
Mifid was regulation introduced by the EU around financial research that was intended to reduce conflicts of interest but is widely felt to have harmed capital markets.
Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month, then enjoy 1 year for just $9 with our US-exclusive offer.
Source: https://finance.yahoo.com/news/hunt-slash-protectionist-eu-red-050000841.html