Press release

9 Nov 2020 London, GB

EY comments on the Chancellor’s ambitions for the future of UK financial services

Omar Ali, UK Financial Services Leader at EY, comments: “The Chancellor’s announcement today is as wide ranging as it is ambitious.

Press contact
Sarah Graham

Senior Manager, Media Relations, Financial Services, Ernst & Young LLP

Media relations specialist. London cyclist, social organiser, loves to shop and mama to two strong girls

Related topics Financial Services

UK competitiveness

Omar Ali, UK Financial Services Leader at EY, comments: “The Chancellor’s announcement today is as wide ranging as it is ambitious. It gives us a clearer picture of the vision the Government has for the recovery of the UK economy post-COVID 19, and reassuringly puts financial services at the heart of that recovery, paving the way for substantial innovation in the financial services industry.

“The UK has led the way on regulating FinTech with the regulatory sandbox approach that has now been exported to many other markets. The announcement today that the UK will regulate stablecoin and continue the Bank of England’s work on central bank digital currencies, signals the government will continue to support innovation in UK financial services and is committed to a competitive legislative and regulatory regime for crypto assets.

“The industry will be pleased to see the Chancellor looking at how regulation can enhance the UK’s attractiveness to business and position as global financial hub, while still committing to the highest standards, as evidenced by the UK becoming the first country make TCFD-aligned disclosures mandatory. This adds to the Treasury's recent consultation on the future of financial services regulation; another indicator of the ambition to set the UK up as the leader in this space.

“These announcements on sustainability remove some of the barriers and opacity between supply and demand in sustainable finance, laying the foundations for financial services firms to more efficiently and effectively support the transition from brown to green, and creating the opportunity for the UK to lead the way on sustainable finance globally.

“The commitment to tackle barriers to finance for sectors of the economy, such as infrastructure and venture capital, and the review of the listing regime, will both be welcomed as signs the government has the appetite to tackle long-standing structural challenges in the UK market.

“And as the end of the transition period looms, the clarity on how the UK will approach equivalence is much needed. The devil will be in the detail, but as a package of measures this is the clearest and most confident indication yet about the government’s vision for the future for UK Financial Services post two of the biggest changes in recent times – Brexit and COVID-19.”

EEA equivalence decisions

John Liver, UK Financial Services Regulation Leader at EY, comments: “The Government’s intention to press ahead with many EEA equivalence decisions, independently of EU decisions in the other direction, is an important and positive sign to international financial services providers that the UK remains outward looking and open to business for firms from countries that deliver consistently high outcomes. These decisions will allow for more efficient and predictable cross border standards.

“The decisions cover a wide range of areas. The clearest gap, which reflects the position that the EU has taken on the same issue, is in relation to cross border securities business under MiFID, which would be an important enabler of freer market access for trading activities.”

Andrew Pilgrim, UK Financial Services Governments Leader at EY, adds: “With just over 50 days until the end of the Brexit Transition deadline, this suite of unilateral equivalence determinations for EEA states will be welcomed by financial services firms looking for aligned cross border-standards, for example, more favourable treatment for UK banks with exposures to EEA banks or stock exchanges. However, the determinations are selective and do not replicate the level of cross-border access that passporting provides. MiFID II is a notable omission, meaning EEA investment firms will still need a UK branch or subsidiary if they wish to provide services to the UK market. Overall, this is a positive step forward from the UK Government, but at this stage it only goes one way, and firms will have to wait and see what the EU response is. Today’s announcement shows that the UK believes in open, global markets, and while it is not ruling out further equivalence, the next move will need to come from the EU.”

Sustainable Finance

Omar Ali comments: “The Chancellor’s announcement today seeks to tackle some of the biggest stumbling blocks on the path to Net Zero. The measures announced lay strong foundations upon which the UK Financial Services industry can build a world-leading sustainable finance industry and make sure they really are financing the transition of the economy from brown to green.

“Mandatory disclosure and the green taxonomy should bring the consistency and transparency that financial services firms need to make better informed decisions on investments and loans, mitigate risks and create long-term value. In turn, this should result in greater financial stability for the UK economy.

“In addition, the data and insight we will get from mandatory disclosures should also drive innovation in products and services, giving customers and businesses more choice about how they finance the transition.

“This announcement from the Government is a really exciting and ambitious set of measures, but in reality this is only the start. It is going to take significant energy and focus across businesses from all sectors to prepare the disclosures required, as well as from investors and banks to make the most effective use of the disclosures before we start to see the impact on the real economy.”