New UK Chancellor sets out transformation of financial services

Ahead of the Financial Services and Markets Bill’s introduction, UK Chancellor of the Exchequer Nadhim Zahawi laid out three government priorities.
UK Chancellor of the Exchequer Nadhim Zahawi leaves a television studio in London, UK, 13 July 2022.
UK Chancellor of the Exchequer Nadhim Zahawi leaves a television studio in London, UK, 13 July 2022.

Financial regulators will have greater responsibility for setting rules that govern UK financial services and will be given new responsibility to facilitate growth and competitiveness in the sector, the new UK Chancellor of the Exchequer said in his first official speech.

Nadhim Zahawi, who became Chancellor earlier this month, said Tuesday evening that he would introduce the Financial Services and Markets Bill today. It will repeal hundreds of pieces of EU retained law so that those pieces can be replaced with an "agile and coherent regime fit for the UK", according to HM Treasury.

The bill will enable the reform of Solvency II, which sets out regulatory requirements for insurance firms and groups. This could lead to a reduction in excessive capital buffers, giving insurers more flexibility to invest in long-term assets like infrastructure.

"It will also increase the competitiveness of the UK's wholesale capital markets," according to HM Treasury. It could also reinforce the UK's position as a leading centre for technology by supporting the safe adoption of certain types of stablecoins as a means of payment.

The Chancellor said the bill will implement the government's vision for the sector to be open, green, technologically advanced, and globally competitive, while also maintaining high levels of consumer protection.

Zahawi also detailed his three core priorities for the coming months — to deliver:

  • A coordinated, responsible approach to controlling inflation.
  • The government's promise to create the conditions for a private sector recovery.
  • The government's vision for financial services.

To further embrace new technology and innovation, the Chancellor confirmed that the government will examine the application of distributed ledger technology to the life cycle of a UK sovereign debt instrument.

Following the bill's publication, the City of London Corporation and HM Treasury will also publish the inaugural State of the Sector report. This publication brings the voices of industry and government together in one place, according to HM Treasury.

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