IEA - Brexit can improve UK’s financial services industry, argues new report
IEA releases report on financial services regulation post-Brexit
The UK will no longer have a direct influence over the EU27, but it can and should improve its own regulations and work with other financial centres and international standard setters to create a more competitive regulatory environment across the world.
In a new IEA report, authors Shanker Singham and Catherine McBride look at what the UK can do in the context of Brexit that would not only improve the UK’s financial service industry, but also improve global financial services and the availability of capital, hedging mechanisms and insurance internationally.
The UK must capitalise on its natural advantages of size, skill, creativity, language, law, time zone and new-found flexibility and responsiveness to retain its dominant market position.
Financial services regulations must:
• Not restrict growth in financial services
• Not encourage regulatory arbitrage
• Not prevent sections of the economy from accessing capital or other financial products
• Help to develop safe but competitive markets
• Facilitate the growth of new and small businesses.
Develop a strong domestic regime in line with global standards and best practices. The UK should reshape its own regime by removing any unnecessary processes and focusing instead on proportionality of the regulatory outcomes in a transparent and cooperative manner.
Pursue WTO disciplines with renewed urgency. The WTO understanding on financial services should be developed with the goal of liberalisation of market access. The WTO Most Favoured Nation (MFN) principle of non-discrimination should be at the core of any agreement on international financial services.
Form an alliance with other major financial markets, such as Switzerland, Hong Kong and Singapore to enable further and deeper integration opportunities. A UK regime of multilateral mutual recognition (MMR) would allow the UK to strengthen its involvement in global regulation formation and dispute resolution.
Form an alliance with UK-linked international financial centres. The UK should make comprehensive bilateral agreements based on mutual recognition with the Crown Dependencies and the Overseas Territories that have established adequate regulatory standards in key financial service sectors such as banking, asset management, insurance and reinsurance.
Introduce regulation to encourage innovation. Domestic SMEs and fintech companies should have proportionate regimes of regulation and taxation to ensure good conditions for new entrants and dynamic high growth firms.
Establish regulatory coherence agreement between the UK and the EU27. Such cooperation should include shared cost benefit analyses in regulatory promulgation with regard to a range of factors, including impacts on trade and competition.
Allow EU27 headquartered banks with UK branches to continue post-Brexit provided that their home regulators continue to cooperate with the UK authorities, and expedite conversion from branches to subsidiaries if desired. This provides certainty for EU banks trading in the UK, ensures market stability and would be a show of good faith that the UK will not restrict EU27 access to financial services.
Commenting on the report, Shanker Singham, Director of the International Trade and Competition Unit at the Institute of Economic Affairs, said:
“Now is the time for the UK to promote more competitive regulation in global standard setting organisations and to challenge global rules with anticompetitive effects. Financial regulation is already based on international standards in many key areas. Outside the EU, the UK will have the advantage of greater agility in decision making, entering into regulatory recognition arrangements with third countries and implementing appropriate regulations. If these tracks are initiated, the future for UK financial services should be very bright.”
Notes to editors:
For media enquiries please contact Stephanie Lis, Director of Communications: firstname.lastname@example.org or 0207 799 8909 or 07766 221 268
To download a copy of ‘Improving Global Financial Services Regulation’, please click here
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.
Latest News from
JRF - A third of furloughed private renters worried about paying their rent when lockdown ends04/06/2020 12:35:00
New research by JRF finds more than a third of furloughed private renters (37%) are worried about being able to pay their rent when the coronavirus lockdown ends.
1.1 million more people face poverty at end of 2020 as a result of coronavirus pandemic, finds IPPR04/06/2020 11:35:00
The economic fallout of the pandemic could leave 1.1 million more people below the pre-Covid poverty line at year end, including a further 200,000 children, according to analysis released today (Thursday) by the IPPR think tank.
The Prime Minister’s commitment to provide guaranteed apprenticeships to young people is “foolish”, says IEA expert04/06/2020 10:35:00
IEA Editorial and Research Fellow Professor Len Shackleton responded to the Prime Minister’s pledge to guarantee apprenticeships to young people post-pandemic
Kings Fund - Covid-19 has exposed the 'stark inequalities' that exist in our society04/06/2020 09:35:00
The King's Fund responds to the PHE report on disparities of the risks and outcomes of Covid-19
IPPR - Coronavirus misinformation warning as half of Britain says it has been exposed to “fake news”02/06/2020 13:40:00
A new report from the progressive think tank IPPR today reveals wide gaps in the public’s knowledge on key public health issues, raising concerns about the effectiveness of health education and the risk of disinformation amid the coronavirus outbreak.
Demos - People’s Commission on life after Covid-19 launched to lead largest ever public conversation on Britain’s future02/06/2020 12:35:00
Cross-party think tank Demos has launched a People’s Commission on Life After Covid-19, Renew Normal, to lead the largest ever public conversation on the future of the UK. Using Demos’ pioneering technology, the project aims to involve up to one million people from all walks of life in shaping society after the coronavirus crisis.
IEA - Severing ties with WHO offers opportunity to “build something better”02/06/2020 11:35:00
IEA Head of Lifestyle Economics Christopher Snowdon responded to Donald Trump’s announcement that the US will terminate its relationship with the World Health Organization
IFG - Five options for securing more time for a Brexit deal – or no deal02/06/2020 10:35:00
Time is short for the UK and the EU to agree and ratify the terms of their future relationship – and coronavirus has added to the pressure. A new Institute for Government paper has set out five options for both sides to secure more time after the 31 December deadline.