The government has dropped plans for key legislation to protect the financial services industry in the event of a no-deal Brexit after a cross-party rebellion.
Ministers pulled the Financial Services (Implementation of Legislation) Bill less than a month before the UK is due to leave the EU because it was facing defeat in a vote on increasing transparency in offshore territories.
The government faced a revolt over a cross-party call for the Crown Dependencies – Jersey, Guernsey and the Isle of Man – to introduce a public register showing the true ownership of companies based there by the end of next year. Andrew Mitchell, the former Conservative international development secretary, and Dame Margaret Hodge, the Labour MP, had put forward an amendment, which was meant to increase transparency and tackle tax dodgers.
Describing the amendment is “an important continuation of the G8 agenda on transparency and openness to combat money laundering and tax evasion”, Mitchell said the amendment will in the future be brought back to the House. He said: “Parliament decided last year that the British Overseas Territories should adopt open registers of beneficial ownership and so now should all members of the British family.”
The bill is part of the government’s no-deal Brexit planning, allowing the UK to adapt to changes in EU financial services legislation. Officials insisted that the government would ensure it had the powers in place that it needed in a no-deal scenario.