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Unpacking the financial services and markets bill

Unpacking the financial services and markets bill

Khalid Talukder, Co-Founder of DKK Partners 

The economy continues to show signs of instability and uncertainty, showing a decline of 0.1 per cent in GDP in May, as the government perseveres in their fight to bring inflation down and grow the economy. The UK has always been known as a financial hub, and as FinTech takes off, solidifying this position will play a key role in attracting international investment.

The Financial Services and Markets Act 2023 is set to unlock £100 billion and revolutionise the financial services sector in the UK. This groundbreaking legislation aims to create an open, sustainable, and technologically advanced financial landscape, providing significant opportunities for businesses across various industries. 

The recently announced piece of legislation will help unlock the benefits opened up by Brexit by capitalising upon opportunities to tailor regulations to the UK financial sector. As new technologies develop at pace, legislation that enables the development, implementation and use will be beneficial for both businesses and international relations. 

Unpacking the Bill 

The bill is designed to allow businesses in the UK to thrive and operate without unnecessary restrictions. As the UK focuses on achieving Tech Superpower status, promoting businesses that breed innovation will play a key role in cementing the UK’s global position. 

The legislation will contain new powers for the UK, which are now available due to Brexit agreements, allowing the nation to take control of the financial services sector. The delivery of the Edinburgh Reforms will be enabled, promoting the UK as the most dynamic and competitive financial hub in the world. 

The bill will focus on opening up the financial services sector, introducing new secondary objectives for the Financial Conduct Authority and the Prudential Regulation Authority, enhancing the scrutiny and accountability of regulators, removing unnecessary restrictions on wholesale markets and establishing ‘sandboxes’ to facilitate the use of new technologies such as blockchain. 

Business and Economic Prosperity 

The changes will offer huge businesses benefits as restrictions are removed and innovation is promoted, allowing leaders to operate in a safe, secure and open environment. 

Not only will the bill benefit businesses within the UK, but it will also act as a magnet for international investment. By offering a stable framework and favourable business conditions, the UK aims to entice global investors to choose the UK as their preferred destination.

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Research from the Office of National Statistics highlights the impact of inward foreign direct investments (FDI) in the UK, with FDI positions rising to £2,002.4 in 2021. The Financial Services and Markets Bill focuses on building upon this, cultivating an attractive environment that will boost foreign investments and solidify international relations. 

Robust regulations will provide both stability and flexibility, aiming to create an ecosystem that supports businesses while ensuring the integrity and security of the financial services, helping to maintain trust, both domestically and internationally, making the UK an attractive destination for investment.

The government has recently shown support to SMEs, revealing the SME action plan earlier this year, followed by the launch of an MP enquiry into SME financing, and the bill further demonstrates the government’s commitment to supporting SMEs and driving economic growth. 

Advancing the Financial Services Industry

In an era marked by substantial digital transformation, the financial services industry requires advanced regulation to adapt and thrive. The Financial Services and Markets Bill acknowledges the evolving landscape as it seeks to provide a regulatory framework that facilitates innovation while safeguarding consumers and market integrity.

The financial services will act as a central sector in driving growth and as the FinTech industry gains momentum, offering technical expertise and support to businesses looking to enhance their processes, support towards the sector should welcomes with open arms. 

The FinTech industry can serve as an enabler to other industries, for example, providers can support businesses in gaining insight into the use of data which can be used to identify and mobilise new revenue streams. They can also enable faster payments, improve worldwide opportunities, and strengthen international ties.

Ultimately, the financial services and FinTech sectors can act as innovation drivers across not just their own industry, but across multiple industries, nationally and internationally, that are looking to capitalise upon the offerings of new and emerging technologies. 

A Global Financial Hub 

The Financial Services and Markets Bill signifies the UK’s commitment to maintaining its status as a global financial hub while heading towards attaining Tech Superpower status by capitalising on the opportunities presented in the post-Brexit era. It provides a framework for creating a favourable regulatory environment and attracting international investment. 

SMEs, many of whom are desperate to grow, are set to benefit from the new reforms as burdens and strangleholds are removed and a more open, secure market is developed. Allowing businesses that act as the backbone to our nation will promote innovation further, attract more investment and ultimately lead to economic growth. 

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