UPDATE 1-Britain sets out how it will regulate the City after Brexit

(Adds more detail)

By Huw Jones

LONDON, June 23 (Reuters) - Britain will "tailor" capital
rules for insurers inherited from the European Union as it takes
back control of its crucial financial services sector, finance
minister Rishi Sunak said on Tuesday.

Britain left the EU in January and will no longer be
required to follow the bloc's financial rules after December,
when a transition period ends.

Sunak set out on Tuesday how the government intends to
regulate Europe's biggest financial sector, saying that it would
make reforms to maintain the soundness of capital markets and
manage future risks.

EU capital rules for insurers, known as Solvency II, have
long been criticised by UK lawmakers as too inflexible, and the
government start reviewing them in the autumn.

"The government ... plans to bring forward a review of
certain features of Solvency II to ensure that it is properly
tailored to take account of the structural features of the UK
insurance sector," Sunak said.

Britain will also make existing retail customer disclosure
rules known as PRIIPs function better, he said.

Outside the EU, Britain will come under more pressure to
keep its financial services sector globally competitive.

The EU is the biggest export customer for Britain's
financial services and Sunak said an "enduring future
relationship" with the bloc would help to complement the UK’s
leading global role in financial services:

"The government continues to believe that comprehensive
mutual findings of equivalence between the UK and the EU are in
the best interests of both parties, and we remain open and
committed to continuing dialogue with the EU about their
intentions in this respect."

Direct access to EU markets for financial firms from Britain
will depend on whether Brussels deems UK rules to be
"equivalent" - or as robust as those in the bloc. Both sides
have agreed that such an assessment should be completed by the
end of this month.
(Additional reporting by Sarah Young; editing by Guy
Faulconbridge and Kevin Liffey)