“This approach is welcome as it not only allows time for close liaison between government and regulators, but also gives firms time to plan for any material changes away from the existing EU regimes.”
As with the recent consultation on the new regime for the asset management industry, Verma said there is an opportunity for the sector to present its agenda to the regulator.
The FCA has already abolished Priips in terms of product disclosure, and the question now is one of greater convergence or divergence from the EU on a multitude of issues and the answer will differ for each, she explained.
“Some, like the 10 per cent portfolio drop rule, were clearly not fit for purpose, while other rules are multifaceted, with little benefit in divergence.
“Even within tranches, particular areas of EU regulation will likely need its own timetable so a consultative approach with regular updates is welcome as it will help with implementation activities.”
Verma argued that any future changes to UK financial regulation should uphold the UK's position as “a competitive global investment centre”, as well as protecting consumers.
“It’s therefore welcome that the financial services act includes a secondary objective on competitiveness and growth,” she added.
“The current regulatory environment can be complex for both firms and the consumer to navigate and therefore the need for any more rules must be balanced against a need for simplicity and remaining competitive in the global marketplace.”
Additionally, Matthew Connell, director of policy and public affairs for the Personal Financial Society, said the main opportunity in the personal finance space post-Brexit is to “rethink compulsory professional liability insurance”, which was imposed on all advisers recommending pension or insurance-based investment products through the Insurance Distribution Directive, whose provisions are still in the FCA rulebook.
“Professional liability insurance is a valuable form of cover, but if it is compulsory, it means containing cover against mis-selling that providers often do not want to cover, so they may withdraw from the market, impose exclusions or only offer cover to existing customers,” he said.
“Many advisers can only obtain professional indemnity cover from their existing provider, which is not a well-functioning market.
“There are alternatives to compulsory professional indemnity insurance, such as the Financial Services Compensation Scheme or a levy on funds under management. Brexit offers the UK to implement these alternatives.”
Meanwhile, Robert Dedman, a partner at CMS and former head of enforcement at the PRA, said the FCA recognises that the new act gives it an opportunity to tailor the regulatory regime more towards the UK market.
