Financial Services Sector Update: January 2022

As well as moving forward with work on the CBI’s Fintech Strategy, the CBI has been fleshing out the next phase of our sustainable finance agenda.

The CBI has urged the government to set its sights on a more ambitious growth trajectory for the UK economy. The importance of an internationally competitive financial services sector that enables growth across the whole economy was reiterated in this speech.

Please see below for the multiple opportunities for members to get involved and shape our work.

Policy updates

HMT Future Regulatory Framework (FRF) Review

The Future Regulatory Framework (FRF) Review was established to determine how the overall approach to regulation of financial services needs to adapt to the UK’s new position outside the EU and to ensure the regulatory framework is fit for the future.

The next phase of this process is now live, it sets out a package of proposals that builds on the overall blueprint for financial services regulation set out previously, focusing on the split of responsibilities between Parliament, the government and regulators.

The CBI is finalising its response – ahead of the consultation deadline on 9 February 2022 – having worked closely with members and FS trade associations to develop our position. In our response, the CBI will highlight why a regulatory strategy is critical to realising the government’s vision for financial services and that proposals should be part of a wider debate between government, Parliament and industry.

If you would like sight of our response, please contact Chris.

CBI response to HMT Buy-Now Pay-Later (BNPL) regulation

The CBI responded to HMT’s BNPL regulation consultation on 6 January. In our response, we highlighted the need for clarity on the definition and scope of BNPL regulation; balancing innovation and competition with consumer protection; avoiding a burdensome regulatory regime for merchants.

To see of our response or discuss next steps on this work, please contact Megan.

How to get involved

FinTech Strategy

Within the CBI’s Economic Vision Seize the Moment, the UK’s financial technology (fintech) sector has been identified as a key opportunity under the innovation pillar of the report.

Seize the Moment identifies that UK fintechs could capture £32bn of additional revenues in 2030. Additionally, there is a substantial prize for those businesses that adopt and work with fintech firms in terms of their own growth and efficiency – top, middle, and bottom line.

Financial and related technologies are being viewed as a key enabler for business growth, by driving digitisation within firms to create efficiency gains (such as process improvements) as well as proposition improvement and development (businesses using fintech solutions to improve their own customer proposition). Businesses are harnessing the power of fintech solutions to give them a competitive edge.

The CBI is therefore interested in looking at both how businesses can work more effectively with fintech to unlock growth opportunities as well as how fintechs can better understand and provide the solutions to businesses’ needs. We’re looking for input from members on:

• Shaping our fintech policy asks
• Case studies on fintechs providing business solutions
• Insight on successful fintech/corporate partnerships, or barriers to forming such partnerships

To get involved, please speak to Megan.

Bank of England CBDC Engagement Forum

The CBI is a member of the Bank of England’s Central Bank Digital Currency (CBDC) Engagement Forum. The Bank of England and HM Treasury are using the forum to inform their approach to CBDC including policy considerations and functional requirements regarding CBDC.

More generally, the EF will have an important role in helping the Bank and HMT understand the practical challenges of designing, implementing, and operating a CBDC. Chris Wilford, Director of Financial Services Policy, is representing the CBI on this forum. To feed into the CBI’s work, please contact Megan.

Taxonomy Working Group & the GTAG

In 2022, our Chief Economist Rain Newton-Smith will be chairing one of the workstreams in the Green Technical Advisory Group (GTAG). At the start, she will focus on advising HM Treasury whether there is a value case for expanding the application of the UK taxonomy to more parts of the economy, and how it could be done. Join our Taxonomy Working Group meeting on 2^nd February at 10:00-11:30 to find out more and express your views on the topic. If you’d like to attend, please contact Julia.

Sustainable Finance Working Group

On 16 February at 13:00-14:30 we will hold our first Sustainable Finance Working Group meeting in 2022. We will focus the discussion on biodiversity and nature and will be joined by the CBI’s expert on the topic, Shara Samra, senior policy adviser from the decarbonisation team. Our goal is to identify how nature-related risks and policies impact your business, and how the CBI can support you in this policy area.

Besides this, we will discuss what the CBI will and should focus on from a policy perspective in 2022, and will touch upon topics such as the ‘S’ aspect of ESG and voluntary carbon markets. If you’d like to attend the meeting, please contact Julia.