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  • Financial Services policy briefing: December

Financial Services policy briefing: December

Ana I. Gallego Senior Policy Adviser, Financial Services

As we look to the priorities for the new year, the Financial Services team will focus on a number of critical consultations and will engage with members on the role of financial services in recovery and in the longer term.

09 Dec 2020, 4 min read

Below we set out a list of upcoming priorities and where we would welcome your input.

Financial Services Future Regulatory Framework Review

On 19th October, HM Treasury announced a consultation to explore how the UK regulatory framework for financial services will adapt outside the EU.

The consultation is part of the second phase of the Future Regulatory Framework (FRF) Review and focuses on ensuring effective arrangements for accountability, scrutiny and public engagement with the policy-making process. The government plans to release a second consultation in 2021, setting out a final package of proposals and how they will be considered.

The CBI will respond to this consultation, closing on 19th February 2021. We are currently looking for feedback from members on the following questions:

  • Your views on HMT’s proposed post-EU framework and objective
  • The future scrutiny mechanisms for the regulators
  • How to improve regulatory coordination in the early stages of policy making
  • Your views on how stakeholder engagement could be improved in regulators’ policy-making processes.

Please contact Ana Gallego, Senior Policy Adviser, with any comments.

Solvency II consultation

On 19th October, HM Treasury announced a call for evidence to seek views on reforming the prudential regulation of the UK insurance sector. This call for evidence is the first stage of the review of Solvency II and is underpinned by three objectives:

  • To spur a vibrant, innovative, and internationally competitive insurance sector
  • To protect policyholders and ensure the safety and soundness of firms
  • To support insurance firms to provide long-term capital to support growth, including investment in infrastructure, venture capital and growth equity, and other long-term productive assets, as well as investment consistent with the government’s climate change objectives.

The CBI will respond to this consultation, closing on 19th February 2021. Please contact Ana Gallego, Senior Policy Adviser, with any comments.

Treasury Select Committee inquiry on the future of financial services

The Treasury Select Committee has relaunched its inquiry into the future of financial services. The FS sector will play a critical role in powering the recovery as well as help the government meet its levelling-up and green industrial revolution goals. As part of this, the inquiry is looking at how the sector can take advantage of the UK’s new trading environment, the FS regulatory framework outside of the EU, how to develop new areas of growth for the sector, and the role of Parliament in influencing new FS regulations.

In the CBI’s view, the government’s financial services priority should be to ensure that the UK retains its long-term attractiveness, as a place to do business and preserves its global competitiveness. In particular, the CBI assessment focuses on three pillars:

  1. Regulatory Development: develop regulations that support global cohesion and deliver market access.
  2. Critical Infrastructure: ensure that financial services has access to the critical infrastructure required to support the sector.
  3. Centres of Excellence: focus on supporting and promoting the UK as the best place to develop established and emerging markets where the UK is a world leader.

The CBI will submit a response to this inquiry, closing on 8th January 2021. Please contact Chris Wilford, Head of Financial Services Policy, with any comments.

UK listings review

On 19th November, HM Treasury published a call for evidence on the UK listings review, aimed at gathering evidence on how to encourage more high-quality UK equity listings and public offers.

Some of the questions addressed in the review include the following:

  • Whether current rules around free floats, dual class share structures and track record requirements strike the right balance between corporate governance and market integrity.
  • Whether requirements for producing a prospectus are appropriate for the UK market.
  • Whether there are specific actions the government could take to boost the UK as a destination for IPOs and optimise the capital raising process for large and small companies on UK markets.

The review may consider feeding into the ongoing Fintech Strategic Review, and will report its recommendations back to HM Treasury early in 2021.

Read the call for evidence and terms of reference. The deadline for submissions is 5th January.

Please contact Chris Wilford, Head of Financial Services Policy, with any comments, or if you would like to discuss any other matters.