A bill designed to ensure the UK’s financial services sector continues to thrive and grasp opportunities on the global stage post-Brexit will be introduced to Parliament.
The Financial Services Bill is an “important first step in taking responsibility for our financial services regulation, ensuring that the UK maintains the highest regulatory standards and remains an open and dynamic global financial centre now that we have left the EU”, HM Treasury has said.
The bill will help promote openness between the UK and overseas markets, as well as maintain the effectiveness of the financial services’ regulatory framework.
John Glen, economic secretary to the Treasury, said: “Now the UK has left the EU, we must ensure we have a regulatory regime that works for the UK and allows us to seize new opportunities in the global economy.
“Following the work we’ve done to prepare for EU exit and ensure a smooth transition to a UK rule book, this bill is the next step in delivering a regulatory framework that boosts the competitiveness of our world-leading financial services sector and ensures that UK consumers are properly protected.”
Overseas market openness
Measures in the bill will introduce equivalence regimes for retail investment funds, in a bid to simplify the process for investment funds that are domiciled overseas to market to UK clients.
It will also “deliver long-term market access” between the UK and Gibraltar for financial services firms on the “basis of alignment and cooperation” now that both have left the EU.
The final measure put in place to deal with overseas markets will update the regime which regulates services and activities of third-country firms in the UK, and it will give the Financial Conduct Authority (FCA) an “appropriate degree of oversight” over firms that could register under the regime.
Regulatory framework changes
The bill will also look to amend the Packaged Retail and Insurance-based Investment Products (Priips) regulation.
It wants to enable “the FCA to make clarificatory rules regarding the scope of the regulation and removing reference to performance scenarios”.
The Financial Services Bill will also allow the Treasury to further “extend the exemption currently in place for Undertakings for the Collective Investment in Transferable Securities (Ucits) funds”.
Additionally, the Treasury is looking to increase beneficial ownership transparency for trusts. It will “clarify the government’s ability to enforce and make changes to extra-territorial trust registration powers”.
The bill will help to “streamline the FCA’s process for removing a firm’s authorisation and taking them off the public register, to improve accuracy and reduce the risk of fraud”.
Lastly, the legislation will make the appointment of FCA chief executive subject to a fixed, once-renewable, five-year term.
Limit disruption
Tim Fassam, director of government relations and policy at Pimfa, said: “Any move to safeguard the continued success of the UK’s financial services industry and our place as one of the world’s leading financial centres is always welcome.
“It is particularly welcome that the government is seeking to limit any disruption to the free flow of capital markets while at the same time seeking to maintain the UK’s world leading prudential standards as we prepare for life outside the single market on 1 January 2021.
“We will be studying the bill in detail and is keen to continue to work with government, the regulator and all other stakeholders to create an effective financial series regulatory regime that balances the needs of consumers and our industry alike.”
