The shape of things to come?

The UK Treasury and the Financial Conduct Authority are currently canvassing wide industry opinion on what they should do next. Here are some of the developing strands of the new UK financial services regime:

• Future Regulatory Framework review (HMT): currently at stage 2, this covers all current UK regime components that will need to adapt in due course.

• Financial Services Bill 2019-21 (HMT): outlines a new prudential regime for UK investment firms (IFPR), including a de-aligned UK-PRIIPS regime and Overseas Fund Regime (OFR) to accommodate EEA-UCITS funds (currently operating within the Temporary Permissions regime).

• Overseas framework review (FCA): an assessment of the ways in which overseas firms will access the UK financial market (as part of revised cross-border financial services framework).

• International firm assessment (FCA): recently finalised, a post-Brexit statement of how the FCA intend to process the full UK applications of international firms (to manage expectations).

• Review of the UK funds regime (HMT): call for input to “identify ways to enhance the UK’s attractiveness as a place to administer funds”. While there are no changes (yet) to UK-AIFMD or UK-UCITS, there will be a general review of local regulatory funds framework, taxation and opportunities for wider reform (e.g. creation of a new Long-Term Asset Fund (LTAF) structure – i.e. a direct competitor to the re-booted EU-ELTIF).

• Professional Funds regime: an additional area of proposed Onshore Professional Fund (OPF) structures, including a Professional Investor Fund (PIF) co-presented by the Association of Real Estate Funds (AREF) and the Investment Association (IA).

• Fintech Strategic review: exploring priority areas for industry and regulators to support the UK fintech sector. This includes cryptoassets / DLT (specifically facing proposed financial services legislation in another HMT call for evidence).

• Sustainable Finance: lastly, one clear obstacle to the UK regime being adjudged “equivalent” to the EU framework remains the omission of Sustainable Finance Disclosure and Taxonomy regulations from local statute in 2020. The UK has set up a joint Government Regulator TCFD Taskforce to ensure the Financial Stability Board’s Task Force on Climate-related Financial Disclosures are fully aligned across the economy by 2025 (i.e. “going beyond the ‘comply or explain’ approach”).