The City thrives on predictability as well as agility and we must protect this post-Brexit
This week marks a pivotal moment for financial services in post-Brexit Britain. More than two years since the UK formally left the EU, the completion of the Future Regulatory Framework Review consultation on Wednesday will herald long expected changes to the financial service sector framework.
The UK’s regulatory regime is widely regarded as one of the best in the world but there is always room for improvement. It is important, however, that any changes are carefully calibrated against the backdrop of a sound framework.
The Chancellor set out an ambitious vision for the future of the UK’s financial regulators to ensure they are able to facilitate the long-term growth and international competitiveness of the UK economy through new secondary objectives. Both the FCA and PRA will need to “buy-in” to this approach for it to make a difference in practice.
This aligns with the recommendations put forward by the sector to ensure the regulatory regime remains fit for purpose now that we have left the EU. It is crucial that our regulatory system is agile and dynamic – while maintaining high standards – as the UK makes its way as an independent trading nation. This makes the proposals to strengthen scrutiny and formalise the focus on international competitiveness all the more important.
International competitiveness does not mean a race to the bottom and should not lead to a regulatory bonfire. There are however areas where the Treasury can amend regulation so that it is bespoke to the UK, for example, on reforms to the insurance prudential regime – Solvency II.
Firms are attracted to jurisdictions with robust rules and supervisors who are proportionate, predictable, transparent and support innovation.
This is part of the reason why more than a year after the UK’s financial services sector left the EU Single Market with no-deal, the City continues to thrive despite the lack of any major regulatory changes so far. While some business has inevitably relocated to the continent, predictions of tens of thousands jobs leaving the City have not come to fruition. In fact, many more thousands of jobs have been created as EU banks have shifted some of their operations to the City to continue to operate in the UK market and as the UK is fast becoming a world leader in fintech and green finance.
The City’s competitive strengths will be further reinforced by our launch today of Global Investment Futures, a new campaign – in partnership with the Department for International Trade and the Investment Association – to preserve and promote the UK as a leading investment management centre globally.
As part of it, senior industry leaders from around the world shared their insights on the UK’s perceived strengths, weaknesses and attractiveness to global investors. The UK is highly regarded as a place to do business due to our unique combination of time zone, language, legal system, global talent, and financial services ecosystem which makes us truly a gateway to global capital and advice.
Many of these factors are underpinned by a strong regulatory and supervisory regime that must remain open and internationally competitive whilst consistently implementing high global standards. This will ensure continued success and support a stronger economy and society across the UK.