After Britain left the EU a large amount of the bloc’s financial regulation was essentially copied over into UK law. Since then the Treasury has set in motion a number of reviews looking at how this could be refined. Post-Brexit there are also a number of other opportunities that the financial sector may be able to take advantage of. Express.co.uk spoke to City groups to see what some of the top requests for the Treasury are for 2022.
Progress towards Rishi Sunak’s vision
In June, Chancellor Rishi Sunak set out a vision for the post-Brexit financial sector saying: “We will maintain and build on the UK’s attractive and internationally respected ecosystem for financial services across both regulation and tax.”
Financial lobby group TheCityUK are keen to see the Treasury and regulators move swiftly on this to get new rules implemented when and where changes are recommended.
One successful example they give are new listing rules brought in by the Financial Conduct Authority.
The new rules followed a review of the UK’s financial technology (FinTech) industry by Ron Khalifa.
Aimed at encouraging innovative new firms to enter public markets sooner, the changes will reduce the barriers to companies trying to list on the stock market.
TheCityUK added: “We also want to see further sustained support for innovation and the adoption of cutting-edge technologies through nimble policymaking and agile regulation.
“This can only be achieved by the Government, regulators and industry working in partnership.”
Avoid falling behind the EU on Solvency 2
Solvency 2 rules currently restrict the amount of money insurance companies can invest.
Head of Regulatory Affairs at think tank the Institute of Economic Affairs, Victoria Hewson described the rules as “arcane and complex” adding that the UK was passing up a big opportunity if it didn’t reform them.
Although Solvency 2 is being reviewed there are concerns the Treasury is being excessively cautious.
The EU itself is pressing ahead with a review of the regulation.
Ms Hewson warned the UK should avoid falling behind and otherwise could “end up with a worse regulatory system than the EU”.
A review of Britcoin
This year the Treasury and Bank of England announced they would launch a consultation looking into whether the UK should issue a Central Bank Digital Currency.
Quickly dubbed ‘Britcoin’ the idea would see the Bank of England issue its own new form of digital money pegged to the pound.
Trade body UK Finance point out various other countries have done this and suggest: “This will be an important consultation given the increasing use of cryptocurrencies.”
New trade deals
TheCityUK describe “great progress” being made on trade agreements with countries such as Japan and Singapore, and in particular highlight the success of the new UK/Singapore digital trade agreement.
The group says it would like to see similar deals done, especially in the Asia Pacific region.
The view is shared by UK Finance who said the UK should “pursue an ambitious trade and investment liberalising policy, seeking agreements which aim to further boost financial services trade and investment”.
TheCityUK also add: “We would like to see the new mutual regulatory recognition deal with the Swiss finalised and signed in 2022.
“We would then like this deal used as a model for further agreements with other like-minded countries.”
The planned agreement with Switzerland is expected to cover a broad range of areas including insurance and banking with the aim of reducing costs and barriers for firms in the two countries accessing each other’s markets.
Chancellor Sunak has previously said the agreement will be “one of the most comprehensive” of its kind in financial services.
Recognition of EU goods
The IEA’s Victoria Hewson would like to see mutual recognition of EU goods.
When Britain left the EU it no longer automatically accepted EU goods with many arguing why should it if the EU wasn’t going to do the same.
However Ms Hewson said it didn’t need to be reciprocal explaining such a move would benefit consumers and “set an example” increasing the UK’s influence in the World Trade Organisation.
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Keeping Britain competitive
UK Finance said it “strongly supported” proposals from the Treasury to have competitiveness as a regulatory principle.
The group has also welcomed moves such as reducing the bank corporation tax surcharge this year and like TheCityUK is keen to see the Government build on its various reviews of how markets are operated now the UK has left the EU.
They added: “Now we have left the EU, the UK is going through a process of evolving its regulatory regime.
“This is something UK Finance will be closely involved with on behalf of our members and we will be making the case for proportionate and agile regulatory reform.
“We have previously welcomed the Government’s reviews of primary and secondary markets and we would like to see the findings of these reviews speedily enacted to maintain a strong banking and finance sector that delivers jobs and investment and drives growth.”
Better reforms to GDPR
The Government is currently consulting on reforms to GDPR however Ms Hewson is concerned this may not go far enough.
She explained the EU has tried to discourage moving away from the GDPR through the prospect of withdrawing adequacy- making it harder to do cross-border business.
She added key areas of improvement would be allowing businesses to use data in innovative ways provided it stayed secure and using technology to give people more choice for themselves- such as allowing them to set devices to not have to “constantly tick away consent boxes”.
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