Update: the future of UK financial services regulation

The Treasury Committee has published a report outlining its plans to launch a new Sub-Committee to scrutinise regulatory proposals for financial services. The Sub-Committee will be chaired by the Rt. Hon. Mel Stride MP and will have powers to “send for persons, papers and records” and agree reports.

Elsewhere, the European Affairs Committee has published a report on the UK-EU relationship in financial services. Highlights include:

  • the overall outlook for the UK financial services sector post-Brexit is positive. London has retained its position as the world’s second largest financial centre, and there is a strong sense that the sector has remained resilient;
  • the government must ensure that its approach to financial services delivers for the whole of the country and its economy, not only for the City of London;
  • the government’s plans to give more powers to the financial services regulators will bring greater flexibility but any new powers must be accompanied by appropriate mechanisms for scrutiny and accountability, including by Parliament;
  • post-Brexit regulatory divergence is inevitable as the result of developments in both the UK and the EU. This will bring opportunities for the UK to innovate and tailor its regulation to its own interests, however, the EU’s increasing emphasis on ‘strategic autonomy’ could lead to barriers to cross-border trade in financial services; and
  • the absence of EU equivalence decisions for the UK reflects a political, rather than technical, approach on the part of the EU, and it appears that the UK is being held to a higher standard than other countries in this regard. However, the absence of EU equivalence decisions has had less adverse impact than initially feared.

Lucy Hadrill