On 21 February 2024, Ashley Alder, Chair of the Financial Conduct Authority (FCA), delivered a speech on ‘Open regulators and open markets’.

The speech centred around the importance of effective global cooperation in enabling the FCA to manage the considerable risks that accompany extremely large volumes of cross-border financial activity. This includes activity between the EU and UK, whose financial services sectors remain closely intertwined, and Mr Alder emphasised the FCA’s commitment to maintaining a strong relationship with the EU.

Mr Alder explained that the FCA’s primary statutory objectives – to enhance market integrity, promote competition and protect consumers – are fully aligned with an open markets philosophy, where healthy competition lowers costs for consumers and high, consistent and proportionate standards which reduce unnecessary, expensive frictions across the financial services landscape.

He expanded on this by confirming the FCA’s commitment to “finding consistent international responses to challenges that increasingly give rise to cross-border risks, collaborating with our EU and international partners to foster open and competitive global economies”, and gave four examples of how the FCA is doing this:

• Overseas Funds Regime (OFR): The UK Government’s recent decision to deem EU states equivalent to the UK under the OFR enables EU UCITS funds to be marketed to UK retail investors, which supports the existing global operating model of asset managers and facilitates greater consumer choice. Mr Alder noted that this also ensures that foreign funds sold to UK investors meet high standards of transparency, investor protection, and regulatory oversight.
• ESG: The FCA is participating in a transition finance working group with a view to leveraging the UK’s new Transition Plan disclosure framework to inform a globally coherent approach. In addition, Mr Alder flagged that the FCA’s recently published Sustainability Disclosure and investment labelling regime is fully aligned with the International Sustainability Standards Board’s drive for global interoperability.
• Fintech: Mr Alder explained that the growing presence of fintechs in Europe is being addressed by most regulators by, firstly, aiming to promote competition, enhance consumer choice and protection and encourage economic growth by fostering an environment that encourages fintech ideas to flourish. However he also warned that regulators must be alert to new risk where the development of common international approaches to protect financial stability and competition is essential.
• Non-bank financial intermediation (NBFI): The FCA’s view is that the priority for regulation of NBFIs should hinge on a global effort to improve the data needed to spot risks in private markets and supervise them credibly. It is working with its international partners in the Financial Stability Board’s Leverage Working Group, which the FCA co-chairs, to identify gaps in existing data and policy tools to address the build-up of systemic risk arising in opaque markets where interactions between leverage and poor liquidity can signal trouble.  

Mr Alder concludes by once again highlighting how strengthening partnerships, enhancing cooperation and upholding shared values will allow regulators to “build a more prosperous future for generations to come”.