On 1 July 2021, HM Treasury published the following papers:
- Mansion House speech by the Chancellor, Rishi Sunak MP. In his speech the Chancellor discusses the future of financial services in the UK. Among other things the Chancellor reports that the government is negotiating a “ground-breaking” deal with Switzerland which will be the “most ambitious financial services agreement ever attempted”. He also states that he sees “no reason of substance why the UK cannot or should not continue to provide clearing services for countries in the EU and around the world.”
- A new chapter for financial services. In this document the government sets out its vision for an open, green and technologically advanced UK financial services sector that is globally competitive and acts in the interests of communities and citizens, creating jobs, supporting businesses, and powering growth across all of the UK. The government’s vision is based on the following:
- An open and global financial hub. Among other things the government is focussed on setting the new global standard for financial services in trade agreements. The UK has already set best practice in the agreements concluded with Japan and the EEA European Free Trade Association countries. The government will build on this through ongoing negotiations with the US, Australia and New Zealand and in future negotiations with India and other countries. The government will also seek to deepen the UK’s financial services relationships with the largest emerging markets, including China, India and Brazil.
- A sector at the forefront of technology and innovation. To deliver this vision the government will move forward on a number issues including facilitating the adoption of new technology in wholesale markets. Working with the UK regulatory authorities the government is developing a new sandbox for financial market infrastructure to allow the UK to promote technological change and support innovation.
- A world leader in green finance. Among its deliverables the government will rally the financial services sector to commit to net zero through membership of the Glasgow Financial Alliance for Net Zero. The government will also work closely with the regulators to encourage and support firms to publish transition plans and will provide further details before the end of 2021.
- A competitive marketplace promoting effective use of capital. Among other things the government will deliver changes to the financial services regulatory framework to reflect the UK’s position outside the EU through the Future Regulatory Framework Review. The government will publish a second consultation in autumn 2021 that will consider changes to the UK regulators’ objectives, principles and accountability, and responsibility for relevant areas of retained EU law.
- HM Treasury consultation paper on access to cash. The Financial Services Act 2021 (FSA 2021) allows for the provision of cashback without a purchase from the end of June 2021 as a non-regulated activity. Before the FSA 2021, retailers had to be authorised or registered by the FCA or act as an agent of a payment service provider to do so. As set out in its October 2019 Call for Evidence ‘Access to Cash: Call for Evidence’, the government considers that cashback without a purchase has the potential to be a valuable facility to cash users in the future and play an important role in the UK’s cash infrastructure, which comes with the additional benefit of supporting local cash recycling. The FSA 2021 provided the opportunity to make this targeted but potentially high impact legislative change whilst detailed work to develop broader cash legislation has continued. The consultation paper now published sets out the details of the government’s proposed policy approach for this broader legislation seeking views in three key areas: geographic access requirements for providing access to cash withdrawals and deposits, designation of firms to meet requirements to provide access and regulatory oversight, including proposals to ensure the FCA has appropriate powers and responsibilities to hold firms to account to meet requirements. The deadline for comments on the consultation paper is 23 September 2021.
- HM Treasury consultation paper on the Wholesale Markets Review. The Wholesale Markets Review was established to determine how the UK’s approach to regulating secondary markets needs to adapt following the UK’s withdrawal from the EU, and to ensure that the framework continues to cater for future challenges and opportunities. The government does not however intend to make changes for the sake of change. The review is not about revolutionising the rulebook but about making it nimble and fit for purpose. The initial reforms to the UK’s wholesale markets regime that are included in the consultation paper have been informed by discussions that HM Treasury and the FCA have had with market participants over the past 18 months. The consultation paper outlines the government’s proposals to clarify the regulatory perimeter to ensure the market can operate in confidence, and to remove requirements that limit firms’ ability to access the most liquid pools of capital where they can get the best outcomes for investors. The consultation considers how the transparency regime for fixed income and derivatives markets can be recalibrated to ensure it is proportionate to the characteristics of these markets. It also proposes reforms to the UK commodities regime as well as amendments to the market data regime, to ensure that market activity is not unnecessarily restricted and to enable participants to identify best available prices, respectively. The deadline for comments on the consultation paper is 24 September 2021.
- HM Treasury consultation paper on the UK prospectus regime review. Lord Hill’s UK Listings Review proposed reforms to the UK listing regime with the aim of attracting the most innovative and successful firms and helping companies access the finance they need to grow. In the consultation paper the government sets out how it proposes reviewing and potentially replacing the prospectus regime the UK has inherited from the EU. In doing so the government is responding to Recommendation 7 of the UK Listings Review. In addition, the consultation paper represents the government’s response to Recommendation 8 of the UK Listings Review in that in chapter 3 it sets out how it proposes to give the FCA the discretion to recognise overseas approved prospectuses should it choose to do so in order to facilitate more secondary listings. In line with Recommendation 9 of the UK Listings Review, the government proposes in chapter 5 of the consultation paper amendments to the liability regime that applies to prospectuses in order to encourage companies to include more forward-looking information in prospectuses. The deadline for comments on the consultation paper is 24 September 2021.