Britain’s financial regulators should be handed more power to create “dynamic” rules, while remaining just as strict, Bank of England (BoE) deputy governor Sam Woods said yesterday.

Woods, who is also the Prudential Regulation Authority (PRA) chief executive, said that “becoming a rule-taker” from the European Union “would be undesirable”, while speaking at a conference in Switzerland.

Despite this, the BoE official noted “there is no reason to be very alarmed” if the “future relationship with the EU takes a form that means we stick with a system which looks exactly like what we have today”, providing the UK had some control over its regulations.

The comments from Woods come after Financial Conduct Authority (FCA) chief Andrew Bailey – also widely thought to succeed BoE governor Mark Carney – expressed his concerns over Labour’s demand for the UK to join a customs union. The PRA CEO also argued against the idea that the UK could deregulate its financial sector to increase business prospects once it has departed from the EU, which is the source of the majority of its current rules.

Woods said: “This, needless to say, would be anathema to the Prudential Regulation Authority and to all of us who have spent the last decade repairing the financial system.”

The FCA, the Treasury and the Treasury Select Committee have all launched reviews into the shape of Britain’s financial regulatory system post-Brexit, with Woods highlighting the “radically different” approaches taken by the EU and the UK, with the former focussing on primary legislation rather than granted regulators rule-making powers.

Woods suggested the UK should adopt an “existing British approach”, namely the Senior Managers and Certification Regime (SMCR), which covers individuals working within the financial services.

The BoE senior official highlighted that the EU’s system was based on its need for clear regulation of 28 member states, and concluded by questioning whether such an approach was appropriate for an independent UK.

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