United Kingdom (and EU regulation)

FCA speech on enhancing the UK’s capital markets

By Simon Lovegrove (UK) on February 9, 2022 Posted in Regulation and compliance, United Kingdom

On 8 February 2022, the Financial Conduct Authority (FCA) published the speech given by Sarah Pritchard (Executive Director, Markets) at the Future of UK Financial Regulation Summit. The speech covers the future of UK financial services regulation and in particular the opportunities that lie ahead for financial markets.

Key points in the speech include:

The FCA continues to take a tough approach at the gateway for crypto-asset firms which need registration under the money laundering regime – with those firms so far falling short at a significantly higher rate than others. The FCA is also running a ‘Use it or Lose it’ pilot, seeking to remove permissions from those firms who do not use them.
The FCA welcomes HM Treasury’s vision for the Future Regulatory Framework (FRF). The FRF proposals would give the FCA, and the Prudential Regulatory Authority, a secondary objective that will require the regulators to operate in a way that facilitates the long-term growth and international competitiveness of the UK economy. A secondary competitiveness objective for UK financial regulators strikes an appropriate balance that recognises the important role the FCA plays in supporting long-term growth of the UK economy, as it continues to deliver on its existing core strategic objectives.
On the buy-side, the FCA sees major opportunities to improve the rules applying to UK-domiciled funds. The FCA is committed to work with the government to support their UK Funds Regime Review, with the aim of making sure that regulations for UK based-funds based support good outcomes for investors.
The FCA expects that sustainable finance will continue to grow as an area of interest, as the world transitions to a zero-carbon future and financial services firms come under closer scrutiny on social issues. The FCA published its ESG strategy last November, to coincide with COP26. Last month, the FCA closed a Discussion Paper on product labelling and product disclosures, with the aim of helping consumers navigate the complex landscape of sustainable investment options. The level of engagement was overwhelming, with around 130 stakeholders providing their views. The FCA is now working towards formal proposals by mid-year.
Later this year, the FCA will be publishing its overarching consumer and markets strategies which will set out its priorities and focus over the coming years.