Watchdog launches inquiry of UK financial services post-Brexit to boost City

The Treasury Committee will take evidence on what the future of financial services could look like after the transition period for the UK leaving the European Union ends in December.

The group of MPs will explore how regulation in the sector should be set and scrutinised by parliament, with current EU directives to cease being relevant after the transition period ends on 31 December.

It added the inquiry will also consider how regulators are to be funded, and to what extent consumer interests should be taken into account in future regulatory changes.

“The financial services sector is a crucial component of the UK economy,” said Treasury Committee chair Mel Stride in an announcement on 19 November. “There are choices to be made by the UK government that will have long-lasting impacts on the future of the sector.

“As part of our new inquiry, we’ll examine how the sector can best take advantage of the new trading environment, what regulatory changes should be made, and what role parliament should play in influencing and scrutinising such changes.”

It will explore areas such as skills and immigration, changes to regulation and the regulators themselves, what the government’s priorities should be, innovation and the establishment of suitable legal mechanisms for developing new rules.

Stride said the inquiry will result in a series of recommendations for how the government, public bodies and the sector itself can ensure London remains a key global financial services centre.

The committee has called for submissions of evidence to the inquiry, which must be submitted before the deadline of 8 January 2021.

It follows a similar inquiry set up by the previous Treasury Committee in 2019, but delays to passing the Brexit bill meant no oral evidence was heard.

A day earlier on 17 November, the Treasury launched a review into the rules governing how companies raise equity capital on London’s stock market as part of its post-Brexit changes to financial regulation.

READ Treasury mulls changes to UK’s post-Brexit listing rules

The department said it hopes to make recommendations that might attract listings from “innovative, high-growth firms”, increasing London’s importance as a financial centre and illustrating its divergence from the European Union.

Chancellor Rishi Sunak said on 9 November that the UK will grant a package of equivalence decisions to EU and EEA member states before the transition period ends, with the UK to use equivalence only “when it is in the UK’s economic interest to do so”.

READ UK’s Sunak vows financial equivalence decisions before year-end Brexit transition

Financial News reported on 6 November that the City stands to lose €9bn in European stock trades per day since EU-based customers will be unable to trade on markets based in the UK unless EU regulators formally recognise equivalence.

Brexit talks between the UK and the EU are still ongoing, with the UK’s chief negotiator David Frost in Brussels this week as the two sides attempt to hammer out a trade deal.

READHere’s why London stands to lose €9bn in European stock trades a day on Brexit ‘big bang’

To contact the author of this story with feedback or news, email Emily Nicolle

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