COVID-19: Regulatory Impact Phase 2 (73) 16/12 - post Brexit competition
Gavin Stewart
Writer, Commentator on financial regulation; Former regulator; Ex-international rower & Sports Administrator. My latest novel, "An Endless Chain", can be ordered at Olympia Publishers, as well as via Amazon and Foyles.
From 16 March to 31 July, I wrote a series of daily blogs looking at Covid's initial impact on regulation. We are now moving into a new phase, most obviously as regulators try to unwind some of the temporary measures they have put in place, but also as they strive to move on. This new blog series will track their progress...
Whether we leave the EU with a free trade agreement or not, January will fire the official starting gun on the latest, probably fiercest, phase of competition in financial services between the UK and other EU countries. From clearing to insurance broking to fintech, we will begin to see how resilient London is as a financial centre for both existing and emerging new business.
One early shot in this battle - apologies for the military analogy but at the moment it seems compulsory to include one - is HMT's planned tax shake-up to attract asset holding companies. It's worth pointing out that this is not regulatory change, and many times over the last 20 years the FSA/FCA has been asked about the UK's competitiveness relative to the regulatory regimes in Bermuda, Luxembourg etc., when the major difference has self-evidently been tax.
Brexit is the occasion rather than the cause of this shake-up but we can expect further such moves - regulatory and non-regulatory - by the UK Government in the coming months. These will probably not challenge EU rules and equivalence directly, but are very likely to dance around their perimeter, with the inevitable accompanying noise.
For the PRA, and especially for the FCA, these Government initiatives, even where they are not directly regulatory might well shift their priorities. As an example, asset management and wholesale insurance broking are not current supervisory priorities, certainly beyond the very biggest firms, but could well demand more resource in the future.
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