Back in February, I wrote a piece for Finextra titled, ‘For financial services, 2022 is a year of real regulatory possibilities. Through a series of events – impossible to have imagined at the time – Rishi Sunak, the then Chancellor is now the Prime Minister and the progress on fintech regulation I had hoped for has not been quite what I had expected.

“Events, dear boy, events.” Prime Minister Harold Macmillan was reported to have given this answer in response to a question about the greatest challenges faced by politicians. It certainly seems to have been a year in which events have sometimes felt the enemy of progress.

Financial Services and Markets Bill – regulating cryptoassets, international competitiveness and access to cash.

We do, however, now have the Financial Services and Markets Bill making its way through Parliament. The initial House of Commons stages are complete and second reading in the House of Lords is scheduled for January 10th 2023. Many of the key messages from that February article remain the same and I have written about the various stages of the Bill as it has progressed.

The UK government and regulators are working hard to find their feet in the post-Brexit world. The UK must have a robust but reasonable regulatory environment to attract international business. The approach set out in the Financial Services and Markets Bill is built on the existing Financial Services and Markets Act (FSMA) model. ‘International competitiveness’ has been added as a secondary objective that the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA) will have to pursue, and it will also signal a change in the relationship between the Treasury and the regulators. 

If considered and drafted ‘right’, regulation focussing on growth and international competitiveness can only be positive.  Similarly, such objectives should not bump up against, or seem counter to, consumer protection.  Right written, right considered regulations should be able to be drafted for the benefit of us all. I will be working hard to propose amendments to the Bill, including supporting a must have regard to financial inclusion duty for the FCA, to ensure that the regulations are drafted as well as possible and absolutely to the benefit of us all.

Electronic Trade Documents Bill – a bill to allow digital trade documents – and promote blockchain development.

From January I will also be sitting on the Electronic Trade Documents Bill Committee, another extraordinarily important piece of legislation. I have called it “the most important law you’ve never heard of”.

It has the potential to bring vast benefits: allowing British businesses to trade easier, faster and more economically, encouraging the development and application of distributed ledger technologies (DLTs) and consolidating English law at the forefront of these important technological and trading developments.

It is a more than material opportunity, but we must do all we can to ensure that we support adoption. The change is permissive – it will allow those that want to transition to digital documents to do so, but will not mandate change. That is absolutely right, but it will be a test of confidence in the technology and will require a significant culture change. I am doing my utmost, therefore, grabbing my megaphone to alert people to the possibilities.

Financial Inclusion

I will also be continuing my work on financial inclusion. Having fought so hard to promote access to cash I am now pushing the government to consider the problems faced when people are unable to use their cash. The issue of an increasing number of businesses refusing to accept cash must be part of the government’s financial inclusion work, in the same way that ensuring digital payments are inclusive and accessible for all. I believe an ‘Access to Digital Payments Review’ along the lines of the excellent Access to Cash Review could be an effective way of achieving this, and I will continue pushing for a review. 

I said something similar at the start of 2022 but now, feeling rationally optimistic about the future, I would like to predict: 2023 will be the year of the regulator, the year of right conceived, right constructed regulation for consumers, for growth, for international competitiveness, for sustainability, for financial inclusion, financial services fit for all our futures.

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