Government 30 Changes to Boost UK Financial Services after Brexit

The government has today unveiled 30 proposed changes to UK financial services laws, regulations and practice to allow the UK financial services to grow again after being cut off from Europe due to Brexit and to make the UK more dynamic not just in financial services again but also in other areas (to follow) such as digital technology, environment friendly technologies, life sciences and advanced technologies by removal the shackles of EU red tape and law, that currently form part of UK laws adopted from the EU after Brexit.

In simple terms, the main areas are financial charging disclosure rules, capital adequacy provisions of financial firms and removing the fact that senior executives are personally accountable and can be prosecuted and even jailed due to their negligence.

Here is a list of some of the proposed changes:

• Removing the fact that banks should segregate personal banking from commercial banking operations to protect each other when one area collapses as happened in the Credit Crunch Crisis.  We believe this is a bad thing and should remain in place.
• Removing personal liability form senior managers and executives to make it more attractive for firms to set up and list in the UK.  We again believe this is a bad thing.  Senior managers should be accountable.
• Removing cumbersome PRIIPS requirements on extremely detailed and broken-down financial charges disclosure under Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulations.  Charges disclosure is required but it could be so much simpler.
• Revisiting short selling regulations.  This is where you are allowed to sell a stock (when you don’t own it yet at the current price, driving the price down and then buying it (after you sold it) meaning you end the day in a net position of not owning any stock, but you sold it before you bought it.  This is speculator heaven.  We believe that short selling should be banned to deliver market stability.
• Speeding up the move to change and pool local authority pension funds as well as allowing company money purchase schemes to consolidate and build super tanker ‘industry wide’ pension funds with the risks then shared by many firms as part of one scheme e.g., an Electricians Pension Scheme or a Fisherman’s Pension Scheme.
• Reforming the Senior Managers and Certification Regime as it takes so long for regulators to approve new Senior Managers to boards etc slowing the pace of business growth.
• Changes to the Building Societies Act and Real Estate Investments Trust regulations to make them more flexible and attractive as well as making it easier for smaller start-ups to enter the market.
• Reviewing/removing VAT on investments funds to make them more competitive.
• Speeding up the settlement lag (time delay) between when trades are made on financial markets, when a buyer and seller agree to the terms of a trade, and the ‘settlement date’ i.e., when the buyer receives the securities (such as shares or bonds) they have purchased, and the seller receives the proceeds.  This will be pursued by an Accelerated Settlement Taskforce and is a good thing.  Making the UK the fastest trade and deal hub is a good thing.

Comment

Overall, we welcome many of the proposed reforms and consultations but there are also areas that we believe should remain the protect the consumer and stability of UK financial markets.