After years of wrangling, the UK has finally had its chance to vote on whether to remain in, or leave the EU.
As well as a Brexit, the result has triggered a change of prime minister and a subsequent ministerial reshuffle that has brought about almost wholesale change. Key ministers in the Treasury and Department of Work & Pensions in particular have either moved to new roles or left government all together.
This leaves the industry facing a threefold challenge: dealing with the implications of a Brexit on our businesses; building relationships with the new ministerial team; and engaging with the government’s Brexit negotiation team to present views and recommendations on our future access to the EU market.
Each of these is highly significant and all firms – large or small – are going to be affected in some way. But, amid all the uncertainty – and in some cases, the angst – that a Brexit is creating, we do have what could probably turn out to be a once-in-a-lifetime opportunity for UK financial services to consider the positive changes we would like to see. We can look further than merely protecting what we already have in the EU and lay the basis on which to enhance the UK’s competitive position in the European and global markets. That is good for business of course; however, it also offers the prospect of improving the chances of people to save and invest more, and by so doing, increasing their lifetime financial resilience.
To make the most of this opportunity, financial services will first have to get the attention of the UK’s Brexit negotiation team. We will not have a free run at this as other sectors will also be clamouring for attention and the best end of the overall deal that is finally agreed.
Fortunately, we already have a strong case. Financial services make a considerable contribution to the UK’s economic output, tax revenues and trade surplus, and is a major employer across the country, not just in London. It is also estimated that foreign companies have invested around £100bn into UK financial services since 2007.
We are also a global leader in FinTech. In 2015 this sector generated £6.6bn in revenue with a workforce of more than 60,000 people, and the government has given its commitment to ensuring that the UK continues to be the best place in the world to be a FinTech company.
Regulation is evolving to match as the Financial Conduct Authority (FCA) adopts new measures to help innovators meet the regulatory requirements. This is increasingly referred to as ‘RegTech’, and initiatives such as the sandbox represent a world first for financial services regulators, allowing innovative businesses a ‘safe space’ in which to test innovative products and services without incurring all the normal regulatory consequences.
Securing access to the EU market for this burgeoning sector is therefore expected to be high on the government’s Brexit agenda. And the benefits are not restricted just to the UK. People across the EU can gain from these products and services too.
Many will no doubt be relishing the chance of a Brexit to take another look at the regulatory rulebook. However, we should not lose sight of the fact that much of the legislation and European directives currently in train have a timetable for implementation ahead of a final Brexit. So the Financial Advice Market Review, Markets in Financial Instruments Directive II and the Packaged Retail and Insurance-based Investment Products will all still be applicable.
The FCA has also confirmed that it is business as usual, and that firms must continue to abide by its obligations under UK law, including those derived from EU legislation. Consumers’ rights and protections are going to remain unchanged unless and until the government changes the applicable legislation.
So it is essential that as we consider the positives for change in our industry, we also keep the consumer at the forefront of our thinking. This means providing them with the reassurance that their best interests are being protected throughout the Brexit process, as well as in the final negotiated deal.
David Dalton-Brown is Tisa director general
