In her first Mansion House speech, the Chancellor announced a package of reforms that the Treasury hopes will ensure the UK’s status as a global powerhouse for financial services. A number of these are likely to directly impact on payments and e-money.
Rachel Reeves said that before they came into Government, she was clear that financial services must play a central part in our economic vision and our plans for economic growth as she considers this sector the crown jewel in our economy. We are the second largest exporter of financial services in the G7. It is one of the country’s largest and most productive sectors, accounting for 9% of our economic output.
Here are some of the key announcements that may have an impact on the payments and e-money sectors and that the Treasury is hoping will help fuel growth.
- Financial Services Growth and Competitiveness Strategy: The first ever Financial Services Growth and Competitiveness Strategy is due to be published in the spring. That strategy will focus on five priority growth sectors including Fintech.
- Growth-Focussed Remit for Regulators: The Treasury has issued new growth-focused remit letters to the Financial Conduct Authority, Prudential Regulation Committee, Monetary Policy Committee, Financial Policy Committee and the Payment Systems Regulator.
- Rebalancing the Regulatory System: Rachel Reeves outlined how she considers that regulatory changes post-financial crisis created a system which sought to eliminate risk taking ‘that has gone too far’ and led to unintended consequences, saying “The UK has been regulating for risk, but not regulating for growth”. She intends to rebalance the system, setting the financial services sector up to innovate and grow.
- Senior Managers and Certification Regime: Reeves states that although the Senior Managers and Certification Regime has helped to improve standards and accountability, some elements of it have become overly costly and administratively burdensome. The Treasury, the FCA and the PRA will shortly publish the outcomes of a review including a commitment to consult on removing the current Certification Regime from legislation.
- Streamlining Regulatory Requirements: The Chancellor highlighted that some regulatory requirements are duplicative and could be streamlined. She raised the current FCA’s Handbook Review which she is hoping will result in reduced resource requirements for businesses to help them grow and innovate.
- FCA and FOS: A new agreement has been developed between the FCA and Ombudsman with clearer expectations on how they cooperate including on historic market practice and mass redress events. There will be a joint Call for Input, which seeks to significantly improve the rules governing how the service operates.
- Digital Gilt Instrument: The Government will be supporting innovation in the financial services sector by launching a pilot to deliver a Digital Gilt Instrument referred to as DIGIT using distributed ledger technology.
- National Payments Vision: Reeves announced the publication of the National Payments Vision including action to progress Open Banking and support our fintech businesses.
The Chancellor hopes that her package of reforms will help to drive growth and competitiveness in financial services.
