The most obvious place to start is the Financial Services and Markets Bill, introduced to “strengthen the United Kingdom’s financial services industry, ensuring that it continues to act in the interest of all people and communities”.
Financial services are vital to the UK economy, employing more than 2.3 million people across the UK, and contributing more than £193 billion (including £75 billion in tax) to the economy.
The Government has followed up on promises of further financial services legislation with this Bill, and the key elements include:
- Revoking retained EU law on financial services and replacing it with an approach to regulation that is designed for the UK.
- Updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness.
- Reforming the rules that regulate the UK’s capital markets to promote investment.
- Ensuring that people across the UK continue to be able to access their own cash with ease.
- Introducing additional protections for those investing or using financial products, to make it safer and support the victims of scams.
So far, post-Brexit international negotiations around financial services have included a Mutual Recognition Agreement with Switzerland, some financial services provisions in trade deals with Australia and New Zealand, and an agreement in principle on a Digital Economy Agreement with Singapore.
However, the Government is clearly signalling that they want to differentiate the UK’s regulatory regime with a view to international competitiveness. Underpinning this approach must be the opportunity to utilise financial services and fintech in particular to generate growth for individuals, business communities, and the country.
Alongside growth we must prioritise inclusion, not least financial inclusion, and I welcome proposals that will protect access to cash. Cash is the second most frequently used method of payment in the UK, and around 5.4 million adults (10%) rely on cash to a great or very great extent in their daily lives.
As payments move online we must not discriminate against or exclude those who are not transacting online. I am equally pleased to see enhanced consumer protections for those who are transacting online and who suffer at the hands of automated push payment scams through no fault of their own.
The Economic Crime and Corporate Transparency Bill
Another Bill that we should most certainly be looking at closely is the Economic Crime and Corporate Transparency Bill described in the Queens Speech as a Bill which will “further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow.”
The social and economic cost to the UK from economic crime is estimated at £8.4 billion per year, and although the recent Economic Crime (Transparency and Enforcement) Act has taken measures to crackdown on economic crime, the Government describes this Bill as building on steps already taken in the previous Bill, now Act.
The main elements of this new Economic Crime Bill include:
- Broadening the Registrar of Companies’ powers so that they become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the Company Register.
- Introducing identity verification for people who manage, own and control companies and other UK registered entities. This will improve the accuracy of Companies House data, to support business decisions and law enforcement investigations.
- Providing Companies House with more effective investigation and enforcement powers and introducing better cross-checking of data with other public and private sector bodies.
- Tackling the abuse of limited partnerships (including Scottish Limited Partnerships), by strengthening transparency requirements and enabling them to be properly wound up.
- Creating powers to more quickly and easily seize and recover crypto assets, which are the principal medium used for ransomware. The creation of a civil forfeiture power will mitigate the risk posed by those who cannot be criminally prosecuted but use their funds to further criminality.
- Enabling businesses in the financial sector to share information more effectively to prevent and detect economic crime.
The Data Reform Bill
We should certainly also be interested in the Data Reform Bill which proposes looking at the opportunity, now that we have left the EU, of considering a data protection regime that does not have the same requirements as GDPR.
The Government describes the main elements of the Bill as:
- Ensuring that UK citizens’ personal data is protected to a gold standard while enabling public bodies to share data to improve the delivery of services.
- Using data and reforming regulations to improve the everyday lives of people in the UK, for example, by enabling data to be shared more efficiently between public bodies, so that delivery of services can be improved for people.
- Designing a more flexible, outcomes-focused approach to data protection that helps create a culture of data protection, rather than “tick box” exercises.
Other Bills to keep an eye on
The Online Safety Bill is brought forward from the last session and much has already been written about proposals there.
Beyond these key Bills there are also measures to boost digital infrastructure in the Product Security and Telecommunications Infrastructure Bill. The purpose of the Bill is to improve cyber resilience and digital connectivity for individuals and businesses across the UK. The Bill proposes tougher security standards for importers and distributors, ensuring product security requirements for manufacturers and accelerating the rollout of broadband.
By 2025 the Government is aiming for a minimum of 85% gigabit-capable coverage and will reform the Electronic Communications Code to reducing the number of new sites and installations needed and utilising existing equipment.
I hope that the UK Infrastructure Bank Bill will also help develop digital infrastructure. The Bill will finalise the creation of the UK Infrastructure Bank by establishing it in law with clear objectives to use its £22 billion financial capital to support regional and local economic growth and deliver net zero, and ensuring it has the full range of spending and lending powers.
One simple and straightforward sounding Bill that could be absolutely transformative is the Electronic Trade Documents Bill.The purpose of the Bill is quite simply to put electronic trade documents on the same legal footing as paper documents.
Currently, there are a jaw dropping 28.5 billion paper trade documents used each year. I have written previously about the potential of DLT and blockchain in supply chain solutions and in trade generally the ability to use digital solutions instead of paper and wet ink signatures is long overdue and will increase, efficiency, security, transparency, traceability and reduce cost! I am delighted to see this Bill coming our way.
What we must deliver through all this legislation is the positive power of well thought-through regulations meeting the potential of new technology. Ensuring that fintech has the environment and the conditions required for optimal development. Enabling growth, ensuring inclusion.
Categories: FinTech
