The financial services sector needs a fresh regulatory and tax
approach to deal with the challenges and opportunities presented
by a rapidly changing technological landscape, according to a new
report by the CBI.
Funding our Future, the result of
conversations with financial services firms across the UK,
illustrates how the sector is a crucial enabling industry for the
wider British economy. With over 1.1 million people working in
the industry across every region of the UK, financial services
contributed £72 billion in tax last year – 11% of total
government tax receipts, or half the planned NHS budget – and
accounted for 7% of demand for other sectors’ goods and
services.
The sector’s products and services, from insurance to
payments, are also a major driver of innovation and wider
economic growth. But the sector is grappling with the challenges
and opportunities of technological change, shifting tax and
regulatory expectations, and new risks such as cybersecurity.
While firms have welcomed the Government’s support for
developments such as FinTech and a new regulatory sandbox, they
need regulations that are fit-for-purpose in a new technological
age. Among other proposals, the UK’s largest business group is
suggesting:
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New mechanisms, such
as a new Treasury Select Committee sub-committee for financial
services, to scrutinise regulations and taxes that put
customers first
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Strengthening engagement with the Financial Stability
Board and more international regulatory coherence to support
investment and innovation
-
A cross-sector financial services technology “hub”,
supported by the Treasury and Financial Conduct Authority, to
share best practice, knowledge and latest technologies.
Flora Hamilton, CBI Head of Financial Services,
said:
“The financial services sector is one of the cornerstones
of the UK’s economy – when it is firing on all cylinders,
everyone benefits. From high street banks to cutting edge digital
payment firms, it helps businesses to grow across the UK, is a
key catalyst for innovation in the economy, and drives
productivity. And that’s not to mention the more than a million
jobs it creates, and the taxes it pays – half of the NHS budget
last year.
“But the challenges and opportunities presented by the
rapid pace, and tremendous scale, of technological change come in
equal measures for financial services firms. To fully embrace
this change, firms are clear that they need the right regulatory
and tax framework in which to operate, so they can innovate and
grow.
“Putting customers at the heart of regulatory changes,
ensuring the UK works hand in hand with the global financial
services industry to stay a strong voice at the forefront of
international regulatory and taxation policy, and driving
innovation at every turn are all ways the sector can become fit
for purpose for the fourth industrial revolution.
“If we get this right, the prize is huge. The UK’s
world-leading financial services sector will become an even
stronger cornerstone for the economy, leading technological
innovation, keeping the country at the top of the global
financial table and driving the British economy to new levels of
productivity and prosperity.”
