Economic Secretary to the Treasury (): The Chancellor’s Mansion House
speech and accompanying document – ‘A new chapter for financial
services’ – set out the Government’s vision for an open, green,
and technologically advanced financial services sector that is
globally competitive and acts in the interests of communities and
citizens, creating jobs, supporting businesses, and powering
growth across all of the UK.
In December 2020, HM Treasury published a call for evidence on
the UK’s overseas framework, and the regimes within it, to ensure
that they continue to work effectively and support the UK’s
consumers, firms, and markets. The Government issued a response
to that Call for Evidence and set out next steps for this review
in July 2021.
In doing so, the Government stated that it remains committed to
maintaining a safe, open, and globally integrated financial
system, enabling international financial services business by
reducing barriers and frictions, where safe and practicable. Our
overseas framework, including regimes such as the Overseas
Persons Exclusion, has been a fundamental part of the success of
the UK as a global financial centre.
In responding to the Call for Evidence, the Government said that
there were four principal areas that it wanted to look at in more
detail:
- The overseas persons exclusion (OPE);
- Investment services equivalence under Title VIII of the
Markets in Financial Instruments Regulation (MiFIR);
- Recognised overseas investment exchanges (ROIEs);
- The Financial Promotion Order (FPO) in general, and
specifically in relation to the distribution of certain overseas
long-term insurance products in the UK.
The Government’s response to the Call for Evidence noted that
there are still information gaps about how firms use the OPE, how
they might do so in future, and what the implications are for UK
financial markets, including their resilience and safety. We have
been working closely with the Financial Conduct Authority, the
Bank of England and the Prudential Regulation Authority to gather
further information in preparation for an upcoming consultation
on the UK’s regime for overseas firms and activities. This
involves considering whether the access for overseas firms
remains appropriate following the UK’s exit from the EU and given
technological developments that are changing how firms can serve
their clients.
The Government is committed to maintaining an overseas access
regime that ensures firms based in the UK can connect with
counterparties and customers globally, while continuing to ensure
that those with significant UK business lines continue to
maintain the appropriate operations, regulatory permissions and
authorisations in the UK; and are able to be supervised
effectively. We want to ensure the UK remains a world-class
environment to do business and maintain the ability of UK and
global firms to benefit from the UK’s deep wholesale markets,
which has been key to the UK’s leading global role in financial
services.
The Government has noted the feedback from respondents to the
Call for Evidence that the current overseas framework is
complicated, difficult to navigate and that the implications of
any changes to the framework should be carefully considered. As
such, the Government intends to assess how the current framework
is being used and consider the implications of any reforms in
careful detail before bringing forward proposals on potential
changes to the UK’s regime for overseas firms and activities. The
consultation will also consider changes to the UK’s overseas
framework which will make it more coherent and easier to
navigate, reinforcing the Government’s commitment to maintaining
an open financial centre.
In considering how best to move forward, the Government wants to
be fully informed about the views of stakeholders. We would
emphasise the importance of further evidence being provided on
how these regimes are used, and how market participants navigate
them, so we can ensure they continue to support the principles
that guide our approach to cross-border financial services.
