The Taskforce on Innovation, Growth and Regulatory Reform has provided its report on reshaping regulation in the UK to the Prime Minister.
The report calls for:
- a common law approach
- proportionality in application
- sandboxes and agile regulation – that encourages growth and responds quickly
- Parliamentary accountability and scrutiny and
- exporting the UK approach
In the financial services sector, the report welcomes an opportunity to change pensions and insurance regulation such that the highest standards of consumer protection and financial stability are preserved, while unlocking investment in growth companies, particularly from DC pension funds. It noted, with approval, the LTAF proposals already published.
On insurance, it notes that parts of Solvency II do not suit the UK’s insurance sector, and recommends some priority changes.
On financial services, it suggests priority changes to the more restrictive parts of MiFID, and calls for greater support and development for the fintech sector. It also calls for a quick expansion of Open Banking to Open Finance, using a Principles-based approach similar to Australia. It also welcomes the Kalifa Review and says BEIS must bring forward Smart Data legislation this year and that, in the interim, at least the 9 largest UK banks should be compelled to open up data for their non-invested savings, credit and mortgage products through APIs.
The report also calls for a graduated regulatory approach to challenger banks and building societies to improve competition – including reducing AML “burdens” for new open banking and fintech services which never come into possession of customer funds.
On disclosure and transparency, it wants changes, again away from what the EU regime imposed, so that financial product disclosures are more proportionate – including confining the KID disclosure requirement to genuinely complex packaged products.
Among the other suggestions are a fast adoption of a central bank digital currency, and a list of regimes which could be simplified.
The Government will consider the report, and respond to its suggestions.