FCA speech on regulatory landscape post-Brexit

The FCA has published a speech by FCA Chief Executive, Nikhil Rathi, on the UK regulatory landscape post-Brexit and beyond. Of particular interest to clients will be the FCA’s focus on sustainability and environmental, social and corporate governance considerations, as well as its work to prevent financial crime and money laundering.

Mr Rathi discussed the following topics:

• Regulation and competition in UK markets. The FCA has always supported open and competitive markets with responsible innovation and is mindful of the important role that international firms have in maintaining competition in UK markets. The FCA’s regulation of overseas firms is aimed at achieving the same outcomes as its regulation of domestic firms and to that end it will continue to apply the same standards to international firms seeking authorisation. The FCA will, however, expect overseas firms seeking authorisation to have an active place of business in the UK. EU firms who are currently accessing the UK markets though the Temporary Permissions Regime (TPR), will be subject to rigorous review as they seek to move towards full authorisation.
• International cooperation and consistency. International cooperation with other supervisory and global-standard setting bodies has never been more vital. The more that international counterparties work towards consistent outcomes, the more the FCA can defer to decisions made by international regulators. The FCA has made a lot of progress in this area recently, having entered into signed Memoranda of Understanding with regulators across Europe and the European Supervisory Authorities. It is also in negotiations with the Swiss financial regulator to build stronger and better ties between markets and to allow more openness and access. The FCA is also part of a wider effort to build greater cooperation with the US and to improve access to US markets.
• Use of the FCA’s increased flexibility. The FCA recognises the increased flexibility that is available to the UK following its exit from the EU. The FCA will use its autonomy to regulate for the benefit of the UK financial markets and its consumers.
• Global regulatory issues. There are wider issues facing the FCA, including in respect of the international agenda on sustainability and environmental, social and corporate governance (ESG). The Government has asked the FCA to have regard to the aim of a net zero-economy by 2050 when it carries out its duties. The FCA is also involved in the global struggle against financial crime and money laundering and is taking steps to stop criminals from causing harm. Going forward, a priority for the FCA is to ensure that firms have adequate financial systems and controls to prevent financial crime, in particular across the banking sector.
• Transforming the FCA. The FCA is undergoing a transformation with restructuring in place to merge its Supervision divisions with its Policy and Competition functions. The FCA has made a number of hires to its senior team with a diverse range of private and public sector experience. The FCA will provide further information on the next steps in the transformation process when it publishes its Business Plan in July.