RegulationFeb 15 2023

Edinburgh reforms welcome but govt must take a cautious approach

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 Edinburgh reforms welcome but govt must take a cautious approach
Jeremy Hunt, UK chancellor of the exchequer. (Chris Ratcliffe/Bloomberg)

Not long before Christmas chancellor Jeremy Hunt launched the Edinburgh reforms, highlighting the “golden opportunity” that Brexit has provided to reshape the rules governing the UK financial sector.

With 30-odd initiatives, the list of areas targeted is extensive and there are a number of measures that we are particularly pleased to see, including the government’s move to revoke the Priips regime – something we have long asked for, and we look forward to engaging positively with the Treasury on an alternative framework for retail disclosures.

It is imperative that any disclosure framework is, in future, able to ensure that the end customer is provided with the right information, and in the right way, in order to better understand the sometimes complex decisions they are making.

The framework as it currently exists does not do this, and in places seems directly in conflict with the Financial Conduct Authority’s broader aims of delivering higher standards of communication under the consumer duty. This is a welcome move both for retail consumers and the providers of services to them.

While it is tempting to ditch much of the existing EU regulation, there are at least some aspects that do work well.

For other proposals, it is not yet possible to say what they might mean in practice, nor what the overall effect might be but, in some cases at least, the first step is for the government and/or the regulators to conduct a review.

The senior managers and certification regime is a case in point, so we will be working closely with our members to understand what elements of this regulation they would like to see improved.

The policy statement focuses on bringing forward the future regulatory framework review and setting out the plan as to how to repeal EU law and substitute it with more appropriate UK regulations, fit for a post-Brexit Britain.

This works alongside the financial services and markets bill, which is the legislative process by which these reforms will be achieved. This is set out in a set of different tranches, according to priority, the first of which will take place this year.

The messages for us are two-fold. One of the key drivers to leaving the EU was that we, from a financial services perspective, would be able to look at aspects of the regulatory landscape that do not work especially well for UK firms and bespoke them in order to ensure that, as one of the driving forces behind the UK economy, our sector can be as efficient and streamlined as possible.