John Glen: We want high standards for financial services. That’s not the same as derailing our competitiveness agenda.

9 Feb

John Glen is Economic Secretary to the Treasury and City Minister, and is MP for Salisbury.

When I was appointed Economic Secretary and City Minister in January 2018, the world looked very different to now. Back then, the fundamental trajectory of post-Brexit Britain was still contested across the country, and across the Conservative Party.

However, I have always been crystal clear in my conversations with Treasury officials that we had to deliver a Brexit for financial services that enabled us to remain global leaders in this industry. It therefore came as somewhat of a surprise to see Daniel Hannan argue on these pages last week, that he had been most disappointed by a failure to distance ourselves from the EU in financial services.

It’s important, right at the outset, to highlight that despite the numerous forecasts of woe – massive job losses, capital flight, loss of competitiveness – our financial services sector remains in robust health. Just last week, the City of London Corporation produced research showing that London was clear of the international field for its attractiveness to the financial services industry.

London scored 61 in analysis of 95 different metrics, ahead of New York (58) and Singapore (53), and far clear of other European centres which had been much talked about as future rivals. Frankfurt trailed in fourth place with a score of 45, while Paris was even lower down at 41.

Last July the Chancellor outlined his vision for an open, technology embracing, green, and globally competitive industry. Having previously worked in financial services, he understands the importance of creating an agile and dynamic sector that works in tandem with a world-leading regulatory framework.

We are not interested in a race to the bottom, where we seek to attract the world’s best companies and nurture start-ups on the basis of creating a Wild West for financial services judging success by how many regulations we have disposed of. The key to the future success of the industry is competitiveness. High standards and robust but reliable regulators enhance that and should not be framed as derailing our competitiveness agenda.

The Government’s response last year to Sir Iain Duncan Smith’s Taskforce on Innovation, Growth and Regulatory Reform (TIGRR) showed very clearly how we plan to maximise the benefits of leaving the European Union. We are repealing all retained EU law and giving the domestic UK regulators, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), powers to regulate the financial services sector.

Following the Future Regulatory Framework the regulators’ action will be underpinned by a growth and competitiveness objective and clear accountability to our elected representatives at Westminster. This is not an EU-lite approach at all. We are pursuing the most fundamental reset and changes in our financial services architecture for many generations, and the Treasury is working at pace to develop the legislation needed to deliver these changes.

We have also had the Ron Kalifa Review of UK Fintech and Lord Hill’s UK Listings Review. This has led to prompt changes in listing rules and the setting up of a Centre for Finance, Innovation and Technology to drive further growth in FinTech across the UK. By avoiding complacency but responding to the findings of independent reviews Government is delivering a radical reform agenda and executing fundamental changes.

Many of the legacies of EU directives are embedded in cost structures and corporate thinking. Our job is to enable the swift rightsizing of such rules in a way that industry finds helpful (e.g. reforming the UK prospectus regime to make access to our deep capital markets easier; creating a new Long-Term Asset Fund structure to allow investors access to better returns or removing the Share Trading Obligation and Double Volume Cap to promote greater choice and better outcome for investors). We aim to do this in ways that minimise disruption and new costs as global growth opportunities abound.

It is a very exciting time to be the minister responsible for financial services. There is enormous opportunity across the UK, not just in London, especially with our innovative, world-leading fintech industry. Increased regulatory agility post-Brexit will also help us to better enable new prospects in cryptocurrency and blockchain. We have an ongoing leadership role to play in the Green Finance arena, and in wholesale markets we continue to move swiftly to maintain the UK’s status as a global financial centre and deliver for large and small UK companies, as well as international businesses who want to raise money and manage risk.

Domestically we intend to legislate imminently to secure access to cash for citizens up and down the country and introduce reforms to Credit Unions so more products can be offered – again building on a deep dialogue with that sector over recent years. I welcome the progress on the No-Interest Loans Scheme which will test whether No-Interest loans can sustainably provide a vital option for those excluded from credit.

We are most certainly living in an unprecedented moment of innovation in the industry, and the space and autonomy that Brexit has created will serve us well to continue capitalising on our unique financial services ecosystem and drive us forward in the years ahead.