The Financial Services and Markets Bill 2023
It is that time of year when many around Europe look to tidy up their to-do list and head off on their holidays. That may be one of the reasons for this week’s slew of regulatory news from digital identity wallets, open banking rules updates and one of the biggest new UK laws post-Brexit.
The Financial Services and Markets Bill 2023, which was given the final seal of approval Thursday (called receiving Royal Assent), will bring a “rocket boost” for the UK economy, according to a Government statement. It underpins a bigger fintech trend at play, a budding competition between financial centres to launch fintech-friendly regulation that will help unlock the next wave of financial services innovation.
Driving Growth and International Competitiveness
New powers, the government claims are now available “due to Brexit” will reform the all-powerful Solvency II, regulation as well ad hand new secondary objectives for the Financial Conduct Authority and the Prudential Regulation Authority. This expanded remit is aimed at boosting the growth and international competitiveness of the UK economy.
“2023 is proving to be a banner year for reforming our financial services. This landmark piece of legislation gives us control of our financial services rulebook, so it supports UK businesses and consumers and drives growth,” said economic secretary to the Treasury, Andrew Griffith.
The UK as a Leading Crypto Hub
This includes allowing the regulation of crypto assets to “support their safe adoption” in the UK and build new ‘sandboxes’ for blockchain applications in financial markets. Andrew Whitworth, Policy Director for EMEA at crypto firm Ripple, says the UK is “making good on its promises” to position the country as a leading crypto hub.
As well as the Financial Services and Markets Bill, a report from the Law Commission also landed this week recommending UK law to accommodate crypto assets. Su Carpenter, director of operations at CryptoUK, says the passing of the legislation into law is a big step forward towards the UK becoming a global hub for crypto and digital assets sowing to the much-needed regulatory clarity it provides.
EU Regulatory Developments
Also this week, the EU unveiled its own important regulatory push with the first look at PSD3, including updates to open banking rules. It also unveiled rules later this week that will lead to the establishment of the EU Digital Identity Wallet.
Despite some clear differing priorities, both the Financial Services and Markets Bill and draft PSD3 rules have provisions in ensuring in law the right of access to free cash.
Boosting Financial Services Cooperation
Alongside this common ground came another big financial services regulatory development this week; the inking of an agreement between the UK and the European Union to boost financial services cooperation.
The reality of the growth of fintech is greater competition, both between new companies looking to disrupt old ones and geographies looking to prepare their economies for future success. While regulation is important, it is just one ingredient in fostering a successful fintech ecosystem.