Following the UK’s departure from the EU, the government’s approach
to financial services will be guided by what is right for the UK and one
of its most productive and innovative sectors.
Hailing the start of a new chapter for UK financial services, the
Chancellor set out plans to bolster the dynamism, openness and
competitiveness of the sector – including issuing the UK’s first ever
Sovereign Green Bond, becoming the first country in the world to make
TCFD-aligned disclosures mandatory, reviewing the UK’s listings regime
to attract the most innovative firms, and leading the global
conversation on new technologies like stablecoins and Central Bank
Digital Currencies.
Rishi Sunak, Chancellor of the Exchequer, said:
We are starting a new chapter in the history of financial services
and renewing the UK’s position as the world’s pre-eminent financial
centre. By taking as many equivalence decisions as we can in the absence
of clarity from the EU, we’re doing what’s right for the UK and
providing firms with certainty and stability.
Our plans will ensure the UK moves forward as an
open, attractive and well-regulated market, and continues to lead the
world in pioneering new technologies and shifting finance towards a net
zero future.
Positioning the UK at the forefront of green finance
Recognising that financial services are a critical enabler in the
drive for net zero, the Chancellor outlined new proposals to support
sustainable financial flows and extend the UK’s global leadership in
green finance ahead of hosting COP26.
To help the UK meet its 2050 net zero target and other environmental
objectives, the government will issue its first Sovereign Green Bond in
2021 subject to market conditions – and intends to follow up with a
series of further issuances to meet growing investor demand for these
instruments. These bonds will help finance projects that will tackle
climate change, finance much-needed infrastructure investment and create
green jobs across the country.
The Chancellor also announced the introduction of more robust
environmental disclosure standards so that investors and businesses can
better understand the material financial impacts of their exposure to
climate change, price climate-related risks more accurately, and support
the greening of the UK economy.
The UK will become the first country in the world to make Task Force
on Climate-related Financial Disclosures (TCFD) aligned disclosures
fully mandatory across the economy by 2025, going beyond the ‘comply or
explain’ approach.
The joint Government Regulator TCFD Taskforce will today publish its
interim report with a roadmap for implementing mandatory disclosures,
many of which will come into force by 2023. The upcoming rules and
regulations will capture a significant portion of the economy including
listed commercial companies, UK-registered large private companies,
banks, building societies, insurance companies, UK-authorised asset
managers, life insurers, FCA-regulated pension schemes and occupational
pension schemes.
The UK will also implement a green taxonomy – a common framework for
determining which activities can be defined as environmentally
sustainable – which will improve understanding of the impact of firms’
activities and investments on the environment and support our transition
to a sustainable economy.
The UK taxonomy will take the scientific metrics in the EU taxonomy
as its basis and a UK Green Technical Advisory Group will be established
to review these metrics to ensure they are right for the UK market.
And to support and benefit from the development of common
international standards on taxonomies, the UK also intends to join the
International Platform on Sustainable Finance.
Extending the UK’s leadership in financial technology
The UK has long been a pioneer in financial services and will remain at the forefront of technological innovation.
New technologies such as stablecoins – privately-issued digital
currencies – could transform the way people store and exchange their
money, making payments cheaper and faster.
To harness the potential benefits of stablecoins, whilst managing
risks to consumers and financial stability, the Government will propose a
regulatory approach for relevant stablecoin initiatives that ensures
they meet the same minimum standards we expect of other payment methods.
And as the UK takes a leading role in the global conversation on
Central Bank Digital Currencies, the Chancellor welcomed work by HM
Treasury and the Bank of England to consider whether and how central
banks can issue their own digital currencies as a complement to cash.
Equivalence and openness
The UK’s attractiveness as a global financial centre is underpinned
by its openness to international markets and robust regulatory
standards.
Equivalence is one of the UK’s central mechanisms for managing cross-border financial services activity with the EU and beyond.
To provide certainty and reassurance to firms and international
partners, the Chancellor today announced the publication of a guidance
document setting out the UK’s approach to equivalence with overseas
jurisdictions – a technical outcomes-based approach that prioritises
stability, openness and transparency.
The Chancellor also announced the UK will be granting a package of equivalence decisions to the EU and EEA member states.
By announcing as many decisions as possible before the end of the
transition period, the UK is delivering on its commitment to be open,
predictable and transparent, even in the absence of clarity from the EU
on their approach, and providing certainty to firms in both the UK and
EU.
The government is not ruling out further equivalence decisions where
these are in the UK interests and remains open to further dialogue with
the EU about their intentions.
The UK’s approach to regulation outside the EU
As the UK builds a global role outside of the EU, it has a unique
opportunity to ensure its regulatory approach to financial services is
tailored for UK markets and allows it to seize opportunities on the
world stage.
The Financial Services Bill, which will be debated in the House
today, is an important step in the process of adapting the UK’s
regulation to reflect its new position and boost the competitiveness of
the sector, whilst demonstrating that the UK remains committed to the
highest international standards of regulation.
The government is undertaking a series of reviews to ensure
regulation enhances the UK’s attractiveness to business and position as
global financial hub.
As part of this, the Chancellor today set out plans to boost the
number of new companies who want to list in the UK. This includes
establishing a taskforce that will propose reforms to the UK listings
regime to attract the most innovative and successful firms and help
companies access the finance they need to grow.
The government will also launch a Call for Evidence on the UK’s
overseas regime to ensure it supports the UK’s position as an open
global financial centre.
To further enhance the UK’s attractiveness for asset management, the
government will soon publish a consultation on reforming the UK’s funds
regime.
And to encourage investment in long-term illiquid assets, such as
infrastructure and venture capital, the Chancellor announced his
ambition to have the UK’s first Long-Term Asset Fund launch within a
year.