Edinburgh Reforms 'shake up' UK financial services

1.      Competitive marketplace promoting the effective use of capital including

1. Overhauling the UK prospectus regime to make it more attractive for firms to list and raise capital.
2. Reforming the rules governing Real Estate Investment Trusts, to reduce friction and allow savers to more easily access higher returns.
3. Review the provision of investment research in the UK, including the effects of the EU’s MiFID unbundling rules, which aren’t applied in leading markets such as the US.
4. Working with the regulators and companies to trial a new class of wholesale market venue that operates on an intermittent basis – improving companies access to capital before they publicly list.
5. Reform the ring-fencing regime in response to the recommendations of the Skeoch Review - including by freeing retail focused banks from the regime – easing unnecessary regulatory burdens on firms while maintaining protections for depositors.
6. Issuance of new remit letters to the Financial Conduct Authority and Prudential Regulation Authority highlighting the new secondary competitiveness objectives. Regulators will have a duty to facilitate, subject to aligning with relevant international standards, the international competitiveness of the UK economy and its growth in the medium to long term
7. Use of Long-Term Asset Funds (“LTAF”) to replace the EU’s European Long-Term Investment Fund regime, which will be repealed from the UK rulebook. The LTAF regime has recently seen its first application from an issuer of this new type of fund to facilitate more capital being deployed into productive assets (UK infrastructure, low carbon and clean energy).

2.      Delivering for consumers

Government also announced that it was consulting on proposals to improve the Consumer Credit Act to encourage innovation whilst cutting costs for consumers and businesses to provide protection to consumers whilst granting new access to greater products and technologies.

3.      A sector at the forefront of innovation and technology

The reforms build on the UK’s desire to harness the benefits of emerging technologies, including committing to shortly publish a consultation on proposals to establish a UK Central Bank Digital Currency.

Other measures will see the Investment Management Exemption extended to crypto assets, ensuring more overseas investment can flow into the sector and the Government has recommitted to establishing the Financial Markets Infrastructure Sandbox in 2023, allowing firms and regulators to safely test, adopt and scale new technologies that could transform financial markets.

4.      A world leader in sustainable finance

The UK is working to become the world’s first net-zero aligned financial centre, a new green finance strategy due to be published in early 2023, and to consult on bringing Environmental, Social and Governance (ESG) ratings providers into the City Watchdog’s regulatory perimeter, to ensure these products are transparent and use consistent standards.