• In his first official speech as Chancellor, Nadhim Zahawi set out ambitious plans to capitalise on the benefits of Brexit and transform the UK financial services sector.
• At Mansion House this evening, Nadhim Zahawi confirmed that the government will introduce legislation tomorrow (20 July) to repeal hundreds of pieces of EU retained law governing the sector – so that it can be replaced with an agile and coherent regime fit for the UK.
• He also set out measures to boost consumer protection, embrace technological innovation, and further enhance the growth and competitiveness of UK financial services.

Plans to seize the benefits of Brexit by revoking EU retained law governing financial services were set out by Chancellor of the Exchequer Nadhim Zahawi in his first speech as Chancellor, at Mansion House this evening (19th July).

These will be replaced with a coherent, agile and internationally respected approach to regulation which is fit for the UK. 

The Chancellor confirmed that the Financial Services and Markets Bill will be introduced tomorrow (20th July) – the most significant piece of financial services legislation for over a decade.

The Bill will implement the government’s vision for the sector to be open, green, technologically advanced and globally competitive – while maintaining high levels of consumer protection.

The Chancellor also used his first speech to set out his core three priorities for the coming months; first, delivering a coordinated, responsible approach to controlling inflation, secondly, delivering the government’s promise to create the conditions for a private sector recovery, and thirdly, delivering on our vision for financial services.

Chancellor of the Exchequer, Nadhim Zahawi said:  

“The British people can rest assured that we are getting on and delivering the benefits of Brexit. 

“The measures I have announced tonight will unleash growth across our financial services sector and will allow us to unlock tens of billions of pounds of investment into the UK economy.

“Consumers will remain protected, with legislation ensuring that victims of scams can be compensated while also acting to protect access to cash for the millions of people that rely on it.”

The Financial Services and Markets Bill will enable the reform of Solvency II, which could lead to a reduction in excessive capital buffers and give insurers more flexibility to invest in long-term assets like infrastructure. It will also increase the competitiveness of the UK’s wholesale capital markets, and reinforces our position as a leading centre for technology by supporting the safe adoption of certain types of stablecoins as a means of payment.

The financial regulators will also have greater responsibility for setting the rules that govern UK financial services, and for the first time, they will be given a new secondary objective to promote growth and competitiveness of the sector. This will complement their existing objectives ensuring the safety and soundness of firms, protecting and enhancing the integrity of the UK financial system, promoting competition in the interests of consumers, and ensuring that consumers receive an appropriate degree of protection . 

The Chancellor set out that the Bill will include new measures to increase regulators accountability; and confirmed that any further powers to intervene in financial regulation in the public interest, so called “call-in” powers, are under consideration.

Following the publication of the Bill, the City of London and HM Treasury will also publish the first annual State of the Sector report. This publication brings the voices of industry and government together in one place, and affirms support for the government’s vision for the sector – with the UK’s approach to regulation being favoured by 31% of senior executives – more than anywhere in the world. The report also highlights the financial sectors’ importance to the UK economy, supporting 2.3 million jobs – with two thirds of those outside of London – and contributing £1 in every £10 to the UK’s economic output.

The Chancellor also set out steps to make the UK one of the most attractive places in the world for firms to list and access the finance they need to grow – accepting all of the recommendations for government from the independent Austin Review into Secondary Capital Raising – the process listed firms use to raise further capital.

As part of this, the Chancellor appointed Sir Douglas Flint to Chair the Digitisation Taskforce recommended by the Review, which will drive the modernisation of the UK shareholding framework and eliminate paper share certificates to improve efficiency. The government will also streamline the capital raising process by reforming the Companies Act to shorten rights issues and the processes around them.

To further embrace new technology and innovation, the Chancellor confirmed that the government will take forward work to understand the application of Distributed Ledger Technology to the lifecycle of a UK sovereign debt instrument, helping us to better understand the potential benefits of this technology while also supporting innovation in the wider financial services sector.

The Chancellor made clear that the government will always be on the side of consumers by confirming plans to legislate to safeguard access to cash for a generation, and enabling the Payments Systems regulator to reimburse victims of Authorised Push Payment fraud – which stood at almost £600 million in 2021.

• Legislation to enhance the competitiveness of UK financial services and unlock growth and investment across the UK was introduced to Parliament today (20th July).
• The Financial Services and Markets Bill repeals hundreds of pieces of EU retained law to enable a coherent, agile and internationally respected regime that works in the interests of the British people.
• Consumers will be protected through legislation safeguarding access to cash for generations to come and enabling the Payment Systems Regulator to direct banks to reimburse victims of Authorised Push Payment fraud.

Legislation to enhance the competitiveness of the UK financial services sector and unlock tens of billions of pounds of investment across the UK economy was introduced to Parliament today (Wednesday 20 July).

The Financial Services and Markets Bill repeals hundreds of pieces of EU retained law to deliver a comprehensive model of regulation for the UK – establishing a coherent, agile and internationally respected approach to financial services regulation that works in the interests of British people and businesses.

The Bill will implement the government’s vision for the sector that is open, green, technologically advanced and globally competitive – while maintaining high levels of consumer protection.

Chancellor of the Exchequer, Nadhim Zahawi said:

“Today is a landmark day for financial services in the UK.

“Through the introduction of this Bill, we are repealing hundreds of pieces of burdensome EU regulations and seizing on the benefits of Brexit to ensure the financial sector works in the interests of British people and businesses.”

The Bill implements the outcomes of the Future Regulatory Framework Review, giving the financial regulators greater responsibility for setting the requirements for UK financial services, and for the first time, a new secondary objective to promote the growth and competitiveness of the UK economy including the financial services sector. This will complement the regulators’ existing objectives of ensuring the safety and soundness of firms, protecting and enhancing the integrity of the UK financial system, promoting competition in the interests of consumers, and ensuring that consumers receive an appropriate degree of protection.

The Bill also includes enhanced mechanisms for engagement with stakeholders and accountability, scrutiny and oversight of the regulators by Parliament and the Treasury. This includes a new ‘rule review’ power which will enable the government to direct the regulators to review their rules where it is in the public interest.

To maintain the UK’s position as an international, open and competitive financial centre, the Bill will reform EU-derived legislation governing our capital markets, ensuring that our rulebook is fair, outcomes based and maintains high regulatory standards.

This includes removing the share trading obligation and double volume cap from MiFID II, which restrict how and where firms can execute trades, and granting the FCA new powers to enhance the transparency and effective function of markets.

The Bill will also give new powers to the government and regulators to better enable them to implement Mutual Recognition Agreements – which are agreements between two trading partners, designed to remove technical and regulatory barriers to trade.

To ensure the UK remains at the forefront of new technologies and innovations, the Bill will enable certain types of stablecoins to be regulated as a form of payment in the UK. In fostering these new innovations, the Bill will also enable the creation of Financial Markets Infrastructure Sandboxes – allowing firms to test the use of new technologies and practices in financial markets, increasing efficiency, transparency and resilience of new products.

As part of plans to ensure consumers are protected, the legislation includes measures that will safeguard access to cash for generations to come; powers to enable the Payments Systems Regulator to direct banks to reimburse victims of APP fraud; and establishes a new regulatory pathway for firms to be able to approve financial promotions, ensuring they better reflect FCA rules which state that promotions should be fair, clear, and not misleading.

As part of this approach, the government will ensure greater financial inclusion through powers enabling credit unions, which provide low-interest forms of credit, to offer a wider range of products to their members

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Notes to editors

The UK today (20 July) marks another milestone in its US state level strategy as it signs its second trade and economic Memorandum of Understanding (MoU) with a US state – North Carolina.

Like the MoU signed with Indiana in May, the agreement with North Carolina will look to tackle unnecessary barriers to trade, cut costs and slash paperwork so British and North Carolinian businesses can work together more efficiently.

The MoU will boost collaboration in areas such as clean tech and energy infrastructure by enabling both sides to share ideas, skills and knowledge, supporting public and private partnerships and driving capital investment. It will also target trade barriers, increase investment, and enhance business networks in previously underinvested regions to support the UK’s levelling up agenda. 

The partnership will seek to accelerate growth in green trade, particularly in electric vehicles and offshore wind. The UK is already a global leader in wind power with more offshore installations than anywhere else in the world.

North Carolina is the ninth largest state in the US in terms of population and its nearly $550bn GDP is approximately the size of Sweden’s. Its biggest city Charlotte is the second largest financial centre in the US after New York and the Piedmont region is famous for its world-leading clinical research hub, the Triangle.

The state already buys $1.6bn (or £1.2bn)- of goods from the UK, making us their 12th largest export market. It offers UK businesses opportunities in fast-growing industries such as automotive, cleantech and manufacturing. For instance, British-based INEOS Automotive has chosen the state to open its North America HQ in Raleigh.

Minister of State for International Trade, Penny Mordaunt said:

Our state-level work shows we can be dynamic and creative with our trade partners. Whilst we continue engaging with Washington D.C., we’re speaking to businesses and political leaders right across America – from North Carolina to California – to grow our already £200bn trade relationship.

North Carolina is home to some of the US’ most exciting companies – from Honeywell to Labcorp – and was recently named America’s top state for business.

Our twin-track approach to trade with the US is helping cut bureaucracy, reduce costs and increase exports and investment, and I look forward to seeing UK businesses reap the benefits.

The UK is continuing to seek out ways to remove barriers to trade at a state-level as part of a wider US trade strategy. We plan to sign additional agreements with Oklahoma and South Carolina in the coming months, with even more in the pipeline.

The UK has also delivered major trade breakthroughs at the federal level. This includes removing restrictions preventing high-quality Welsh lamb and Scottish beef from being sold in the US and resolving the Section 232 tariff dispute, resulting in the removal of 25% tariffs on British steel, a huge win for UK steelmakers.

Duncan Edwards CEO BritishAmerican Business said:

On behalf of our network of chapters and members across the UK and USA, BritishAmerican Business is pleased to see the signing of a Memorandum of Understanding on trade and investment between the United Kingdom and the state of North Carolina.

The UK and USA have an outstanding trade and investment relationship but there is always more that can be done to make it better.  Agreements such as this are helpful in creating ways for businesses from both markets to fully understand the opportunities available to them as they plan their expansion across the Atlantic.

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