Legislation that promises to enhance the competitiveness of the UK financial services sector and “unlock tens of billions of pounds of investment across the economy” was introduced to Parliament this week.

The Financial Services and Markets Bill repeals hundreds of pieces of EU retained law, with the goal of developing a market that is “open, green, technologically advanced and globally competitive – while maintaining high levels of consumer protection”.

The bill implements the outcomes of the Future Regulatory Framework Review, and gives regulators greater responsibility for setting the requirements for UK financial services, and for the first time, a new secondary objective to promote the growth and competitiveness of the UK economy including the financial services sector.

The bill also includes enhanced mechanisms for engagement with stakeholders and accountability, scrutiny and oversight of the regulators by Parliament and the Treasury. This includes a new ‘rule review’ power which will enable the government to direct the regulators to review their rules where it is in the public interest.

The bill will reform EU-derived legislation governing capital markets, which includes removing the share trading obligation and double volume cap from MiFID II (which restrict how and where firms can execute trades) and granting the Financial Conduct Authority new powers to “enhance the transparency and effective function of markets”.

New powers will also be given under the bill to the government and regulators to better enable them to implement Mutual Recognition Agreements.

As anticipated, the bill will enable certain types of stablecoins to be regulated as a form of payment. At the same time, the legislation includes measures that will safeguard access to cash “for generations to come”.

Whilst the draft bill has been largely welcomed, there are some concerns about the proposals.

CEO of insurance broker representative body LIIBA, Christopher Croft, said: "The London market is the leading global centre for commercial risk and reinsurance but other international centres are snapping at our heels and doing business in the UK is increasingly seen as having a greater burden of regulatory costs.

“Government legislation for a regulators' competitiveness objective is welcome but will only work if matched by a strong culture, capacity and capability in the regulator. We would like to see the legislation include a requirement for metrics to be set and reported on by the regulators, to incentivise and track concrete action on competitiveness."

The London Market Group meanwhile saw the inclusion of growth and competitiveness objectives for the regulators as a positive, and something it had been asking for for a number of years, but the group has concerns about the detail around accountability.

“There remain questions about what the regulators need to be doing to show that they are fully considering our competitive position. The Bill gives them a great deal more power but on our initial reading, it appears they also have the power to set and mark their own homework,” said chief executive, Caroline Wagstaff. “We need to see more detail on the accountability measures that government and parliament will have to ensure that we get the culture change we need. We want the new objective to make a real difference but without the necessary performance criteria in the Bill, our fear is that it could be treated as a tick box exercise rather than something which can seriously support UK competitiveness.”

Share Story: