The financial services and markets bill is currently making its way through parliament, and when it becomes law it will represent a significant once-in-a-generation opportunity for our industry, as well as for the broader financial services sector.
At its core, what it provides for is the ability for the UK to revoke on-shored EU law and replace it with bespoke provisions that better fit the way domestic markets operate.
For our sector, this means that longer-term changes to packaged retail and insurance-based investment products regulation – as we have already seen – MiFID and assorted Handbook rules, which are currently governed by retained EU law, are ripe for change.
But these changes are for the medium to long term. The bill, by its nature, is broad. It means changes can be hung off it rather than directly legislated for.
There are also specific issues within the bill that continue to occupy my attention, and it is the introduction of a secondary objective for the Financial Conduct Authority to oversee competitiveness and growth that is giving me the most pause for thought.
To be clear, this is an objective that I and Pimfa strongly agree with. The question we are mostly concerned with answering is: how does one measure competitiveness and growth and, second, how will the FCA be held accountable for it?
Competitiveness, in and of itself, is a reasonably nebulous concept. The UK financial services system is already one of the largest in the world and remains one of the UK’s most valuable assets.
Businesses in UK cities and high streets up and down the country form a huge part of this, and London remains a vital financial gateway to the rest of the world.
I am confident that, regardless of the direction of future policy and regulatory intervention, it will remain one of the great global centres for financial services and a global force for wealth management.
The role of the regulator will be to ensure that this remains the case with both the imposition of proportionate regulation, the timely approval of new and innovative businesses and, as I have written here often enough before, adequate and proactive enforcement when consumer harm may be introduced.
How we measure all of that annually is an extremely interesting question, and it is for that reason that we support proposed amendments in the bill, brought forward by Craig Tracey MP, to provide an assessment of how the FCA’s performance in fulfilling the competitive and growth objective will be met.
However, reporting and measuring is only one side of the puzzle. It remains a point of concern that the levels of accountability, which our regulatory system is subject to, remain somewhat inadequate.
This is not to be taken as a criticism of either the regulator or indeed parliament, but the breadth of both of their respective responsibilities means the current processes of accountability can only ever be light touch.
