Skip to main content
  • The CBI chevron_right
  • Financial Services policy briefing: November

Financial Services policy briefing: November

Ana I. Gallego Senior Policy Adviser, Financial Services

A look at recent developments in the sector and the role of financial services in recovery.

11 Nov 2020, 5 min read

The latest edition of the Financial Services policy briefing looks at recent announcements from the Chancellor and HMT, as well as upcoming workshops and ways to get involved.

Chancellor sets out the vision for the future of UK financial services

On 9th November, the Chancellor announced the government’s approach to financial services following the UK’s departure from the EU. This approach included the following three areas:

  • Subject to market conditions, the Chancellor announced the issuing of the first green sovereign bond next year, the decision to make the Task Force on Climate-related Financial Disclosures (TCFD) fully mandatory across the economy by 2025, and the decision to implement a new green taxonomy.

  • Extending the UK’s leadership in financial technology, the government is currently exploring the regulatory approach for relevant stable coin initiatives.

  • On equivalence, the Chancellor announced the publication of a guidance document setting out the UK’s approach to equivalence with overseas jurisdictions – a technical outcomes-based approach that prioritises stability, openness and transparency. The Chancellor also announced the UK will be granting a package of equivalence decisions to the EU and EEA member states.

  • On the UK’s approach to regulation outside the EU, the Chancellor set out plans to boost the number of new companies who want to list in the UK, including establishing a taskforce that will propose reforms to the UK listings regime to attract the most innovative and successful firms and help companies access the finance they need to grow.

  • The government will also launch a Call for Evidence on the UK’s overseas regime to ensure it supports the UK’s position as an open global financial centre.

  • To further enhance the UK’s attractiveness for asset management, the government will soon publish a consultation on reforming the UK’s funds regime.

Read the full speech

Recent HMT announcements – new business support announced

Earlier this month, the Chancellor announced that the furlough scheme would be extended until the end of March, with a review expected in January to examine whether the employer contribution should increase. The Job Retention Bonus, which was due to be rolled out in February, will now be redeployed at an appropriate time.

The Chancellor also confirmed that with mortgage payment holidays not coming to an end on 31 October, borrowers impacted by COVID who haven't had a mortgage holiday will be entitled to a 6-month break. Those who have already started a mortgage holiday can top up to 6 months without it being recorded on a credit file.

The Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme and the Future Fund have all been extended until 31 January.

Financial Services Bill

The Financial Services Bill was introduced to Parliament on 21 October 2020. The bill is the first step to ensure the UK's regulatory framework for financial services continues to function effectively now that the UK has left the EU, and is designed to enhance competitiveness of the sector and ensure UK customers are protected.

The measures established in this bill can be grouped into three sections:

  • Enhancing the UK’s world-leading prudential standards and promoting financial stability
  • Promoting openness between the UK and international markets
  • Maintaining sound capital markets

Read what the Financial Services Bill means for your business

The Financial Services team will follow these developments closely in the coming months. Please get in touch with Ana I. Gallego if you would like to discuss this further.

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 January 2021. Please reach out to the financial services team if you would like to discuss further. 

Read more about the consultation.

Guarantee workshops

Extension of loan schemes and new repayment terms will help very many businesses. Important new guarantee scheme provides for refinancing and restructuring of COVID-19 loans, alongside growth.

The coronavirus loan schemes have provided a critical lifeline to businesses. CBILS brought much needed process improvements to the Enterprise Finance Guarantee (EFG+). These process improvements could be built into a reformed EFG - an EFG+ that is available to support businesses in the medium to long term. This could include maintaining the government guarantee, facilitating unsecured lending and increasing the portfolio limit from 20% to 100% under EFG+.

The CBI will be holding a number of workshops to inform its positioning. To find our more please contact Chris Wilford.

Access to cash

On 15th October 2020, HM Treasury published a Call for Evidence on Access to cash. The Call for Evidence sets out the government’s aims for protecting cash, and seeks views on the following topics:

  • How the government can ensure the UK maintains an appropriate network of cash withdrawal and deposit-taking facilities
  • Explore the potential role of cashback
  • The factors affecting cash acceptance
  • Assess if the government should give a single regulator responsibility for access to cash.

The CBI will be submitting a response to this call for evidence, closing on 25th November 2020. If you would like to get involved, please contact Ana I.Gallego.

Insurance

The CBI, in collaboration with ABI and BIBA, has created a guide on top COVID-19 insurance tips for SMEs.

Separately, the CBI will host a roundtable on Solvency II on Wednesday 18th November, 14:00-15:00. For this session, we would like to focus on HMT’s Solvency II Call for Evidence, bringing together insurers and infrastructure investors to shape the CBI’s high level response.

Please get in touch if you would like to get involved.