Deal or no deal, UK financial regulation will get tougher post-Brexit.
UK financial services regulation may alter but it won’t ease in a post-Brexit world according to a new report from KPMG “The future shape of UK FS regulation: Rule taker or rule maker?”.
Whilst the UK regulators have been explicit that they will not deviate from EU regulatory standards, the UK’s departure from the EU leaves considerable scope for divergence. Simply the initial task of rewriting EU rules into UK legislation will lead to a host of tweaks and edits – it won’t be possible simply to ‘copy out’ all the rules. However, while there are a few areas of regulation where the UK has taken a more light touch approach, there are many more examples of the UK applying more stringent rules or leading the regulatory response to emerging conduct issues*. This long history of “super-equivalence” is unlikely to change, meaning UK financial regulations will only get stricter in future.
Supervisory priorities around operational resilience - checking firms are braced to protect against, and respond to, cyber-attacks or technology failures - are already increasing. Today’s report highlights six likely areas of focus for future UK financial regulation: financial stability, consumer protection, Fintech, UK competitiveness, the impact of post-crisis reforms and the pursuit of social objectives.
Julie Patterson, Regulatory Insight Centre, KPMG UK, comments:
“Seven in 10 UK consumers believe we will leave the EU without a deal. Achieving a financial services deal seems increasingly unlikely. This may leave considerable scope for regulatory change.
“The regulators on both sides have been clear they don’t want regulatory arbitrage, but the UK has in the past taken a different path, such as being the only country in the EU27 to ring fence its banks, and that trend will become more common when we are no longer in the EU. I see no sign that the UK regulators’ tendency to lead the debate on risk and conduct issues will abate so regulation may become more demanding, not less.”
Notes to editors
*See some examples of regulations where the UK has veered from the EU standards on P6 &7 of the report.
Christina Bridge, Senior PR Manager
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