UK announces financial services roadmap- A New Chapter for Financial Services

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The UK issued its financial services roadmap and plans for the United Kingdom post Brexit with clear direction and with new freedoms, for the UK to expand internal trade and cooperation agreements to enable more cross- border access, to become a more open, more competitive, more technologically advanced, and more sustainable financial leader.

Focussed plans to become a global leader in ‘green finance’ including domestic innovation with ‘sovereign/green gilts’, Stable coins and plans for the world-first green savings bond.

The roadmap demonstrates enthusiasm about the UK economy in a post-Brexit environment and sets forth 4 core drivers for future change:

  1. Open and global financial hub;
  2. Sector at the forefront of technology and innovation;
  3. World-leader in green finance;
  4. Competitive marketplace promoting, effective use of capital.

 

Open and global financial hub

The UK seeks to continue to build closer links with advanced and emerging financial centres, such as the cooperation agreement with Singapore, and potential arrangements with Switzerland, and others in negotiation.

Current work underway to further facilitate cross-border collaboration and market access includes:

·         US-UK Financial Regulation Working Group for dialogue between US and UK, in a post Brexit environment;

·         Equivalence measures for EEA countries and granted Switzerland equivalence with respect to share trading;

·         UK positioning as leading western hub for Islamic Finance with a GBP500million sovereign sukuk issuance;

·         Outcome based Mutual-Recognition Agreement with Switzerland;

·         Set global standards for trade agreements for financial services;

·         Deepen financial services relationships with the largest emerging markets, including China, India and Brazil.

Sector at the forefront of technology and innovation

The UK will continue to support innovation and the adoption of cutting-edge technologies within appropriate safeguards and the right protections, with the priority areas of focus being:

·         New technology to support wholesale markets;

·         To harness the benefits of new technologies like crypto assets and stable coins for safe adoption of these technologies in the UK;

·         Protect access to cash by legislating to enable consumers and businesses to continue to make cash withdrawals and deposits within a reasonable distance.

World-leader in green finance

In order to meet the growing demand of sustainable finance, with over 70% of people indicating they want their investments to avoid harm and achieve good for people and the planet, the Government will work with the Financial Conduct Authority (FCA) to create a new sustainable investment label, a quality stamp, to enable consumers to clearly compare the impacts and sustainability of their investments for the first time.

Some of the planned initiatives highlighted are:

·         To build a global financial system that mobilises private finance to support the re-engineering of economies for net zero to ensure that every professional financial decision takes climate change into account;

·         Lead the financial services sector to commit to net zero through membership of the Glasgow Financial Alliance for Net Zero with transition plans and further details being published before the end of 2021;

·         Combat greenwashing with common and transparent definitions of sustainable activities and investments. The UK government will seek advice from the Green Technical Advisory Group on the implementation of the UK Green Taxonomy;

·         Require businesses to disclose their risks and opportunities from, and impact on, the climate and the environment through implementing integrated Sustainability Disclosures Requirements (SDR);

·         Enable consumers to quickly and easily see the environmental impact of their investments through a proposed sustainable investment label to cover retail
investments using information provided through the SDR;

·         Position the UK as the leading global market for high-quality voluntary carbon offsets driven by the newly established UK Voluntary Carbon Markets Forum.

Competitive marketplace promoting effective use of capital

The UK will continue to examine and enhance its regulations to promote effective use of capital to remain a competitive and attractive financial centre. The forthcoming changes include:

• Delivering changes to the financial services regulatory framework to reflect the UK’s position outside the EU through the Future Regulatory Framework. Review to be published in Autumn 2021 covering areas of retained EU law;

• Reform the prudential regulatory regime for insurance firms, Solvency II to set out proposals for a vibrant and competitive insurance sector without compromising high standards of policyholder protection;

• Review of the UK’s wholesale capital markets regime that will consider share trading obligations and double volume caps;

• Review and make proposals to enhance the UK’s prospectus regime so that more
companies can and do list on UK markets;

• Review and enhance the attractiveness of the UK for asset management through reviewing the funds regime, including tax and relevant areas of regulation;

The UK roadmap has clear plans to continue, not only to hold its position as the leading financial centre globally, but to be at the forefront of emerging financial initiatives within and beyond Europe.

“Financial services don’t just generate prosperity at home. They give us the economic power to project our values on the global stage.” – Rishi Sunak

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