As an example of this, the EU itself is looking to amend MiFID2 to iron out areas that need further work. Second, as the world moves on, so the rules need to adapt. If they do not, we will be heading for trouble. The key point here is that good practice means that authorities should be transparent at the time in explaining rule changes, and those changes should be consistent with international standards where appropriate. Let me give three examples of areas of rule changes we in the UK are looking at, two involving banks and one life insurance. First, the Basel regime for banks has, from the outset in the 1980s, applied to so-called “internationally active banks”. The EU has chosen to apply it to all banks and relevant deposit takers. That was a matter of choice. But the Basel regime is heavy duty and complicated when applied to small banks (I know many big banks will say the same, but sorry that’s life). So, we want to see if we can apply a strong but simple framework of rules for small banks that are not internationally active. This is a sensible step in my view and not out of line with the principles and practice of equivalence. Indeed, there are other countries, such as the US and Switzerland that have regimes for small banks and have been determined equivalent to the EU in many areas. Second, the EU changes its rules in December to allow software assets to count as bank capital.
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