It is no secret that various European governments have seen the UK’s decision to opt for Brexit as an opportunity to lure businesses away from London and to the continent. Bespoke marketing campaigns with offers of tailored assistance directed at UK firms could well accelerate the flight of capital, talent and business following the vote.
The sweeteners on offer could be highly tempting for financial services firms and fintechs, which fear the loss of their ‘passporting’ rights. Current rules mean that any company which is given a licence to conduct regulated activities by UK authorities can, ipso facto, conduct such activity anywhere in the EU without the need for further regulatory authority and without having to establish a base elsewhere. The loss of these rights could significantly damage the UK’s status as a gateway to Europe for big international financial service firms.
France’s Financial Markets Regulator, for example, The Autorité des Marchés Financiers (AMF) recently issued a news release to various UK based companies with an approach. This follows similar moves by Germany, Ireland, Hungary and many others.
UK Government response
Despite the uncertainty surrounding the UK’s financial passporting status and the need in future to reconcile competing data regimes, the UK Government remains steadfast in its optimistic outlook for the UK’s burgeoning fintech industry and related sectors. The proximity of world-leading academia, related professional services coupled with a forward looking regulatory regime and favourable business conditions, leave much room for buoyancy in a post-Brexit world. In looking to the future, the FCA’s Innovation Hub & Sandbox, the arrival of Open Banking in 2018, the Bank of England’s work to broaden access to settlement accounts and HM Treasury’s ongoing efforts to create links overseas via its Fintech Bridges initiative will ensure a world leading regulatory position.
Simon Kirby MP, the new City minister at the Treasury, in launching a new fintech conference next year, to showcase innovation in the UK market, said:
‘Backing Britain’s world leading financial services industry is a key part of our plan to ensure the UK remains a great place to do business. The government is determined that London stays at the cutting edge of financial innovation and that’s why we will host a new, annual fintech conference to boost capital investment in one of our fastest growing sectors. This will bring together hundreds of British fintech firms and investors from around the world and cement our position as the global fintech capital.’
It is encouraging to see a UK government response to the various attempts to syphon business away from the capital, which could threaten London’s status at the top of the list for global innovation.