As we move towards a new era for the financial services sector in the UK and the acceleration of advances in FinTech, is it time to move the agenda on from a focus on passport access to an EU single market towards development of a global framework for financial services regulation?
As a major hub for international finance, the UK has an opportunity to highlight its leadership in the development of the international regulation of financial services and FinTech.
This author believes that a longer-term focus is required, advocating the opening up all financial markets and embracing new technologies which are underpinned by mutually agreed global technical and regulatory standards. The benefits would be more effective, rapid and efficient allocation of capital to all compliant economies and increased availability of talent and innovation with a view to providing all citizens with insurance, savings and pensions. The UK is ideally positioned to take a lead in this because of the size and international outlook of its own financial markets, the role that its government and regulators have played historically and a continuing contribution to the setting of global financial standards.
The principle of EU passporting depends on one home state regulator taking responsibility for authorising a financial firm or product pursuant to EU adopted regulation predicated on adherence to global standards and the EU financial services action plan and then a reliance on harmonisation to enforce similar conduct of business rules. This sounds good theoretically, however, in practice, the EU passporting approach has not delivered a frictionless single market for financial services and nor has it adapted consistently to the regulation of FinTech services. Unless it addresses this, European companies will not have full access to the world’s capital, global talent and innovation to meet their growth needs and therefore be able fulfil the saving, insurance and retirement needs of EU citizens.
The full article was published in Global Risk Regulator.