Regulation in the time of Covid: Part 3 (116) 5/7 -"new chapter" or old playbook?

Starting on 16 March last year, I began writing daily blogs about the impact of the Covid crisis on financial regulation. Other issues, notably Brexit and digitisation, have featured as well but Covid remains the dominant driver of regulation as we enter 2021.

"A new chapter in financial services", the policy paper accompanying the Chancellor's Mansion House speech, reads more like a summary of existing initiatives than as being "new" in itself. The more difficult questions are whether these initiatives are coherent and whether, when taken together, they constitute a significant break with the past. On the second of these, the paper feels more like a continuation of longstanding regulatory trends, but much will depend on how the Hill and Kalifa reviews are implemented in practice - see today's consultation paper - and whether UK regulators can consistently strike the promised balance between increased openness and high standards.

Technology and Green Finance are the two main pillars of the strategy, with the other two - becoming a "Global Financial Hub" and a "Competitive Marketplace" - implicitly in support. Other major regulatory jurisdictions will be using similar rhetoric so, to realise the government's ambition, UK regulators will need to engage on a greater level in the development of international standards. As well as technology and the environment, this will involve prudential standards and resilience - tellingly referenced by both Andrew Bailey and Nikhil Rathi in their respective forewords.

However, this commitment to developing and maintaining international standards doesn't naturally fit with some of the other rhetoric around, notably the recent TIGGR report, commissioned by the Prime Minister, which advocates much more of a pick'n'mix approach to regulation. If applied, this might threaten the international trust necessary for the UK to have any chance of achieving the level of influence we want. It might also make the strategy in the policy paper less coherent. Both regulatory approaches are possible, but whether they are compatible...

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