The Financial Conduct Authority has outlined the importance of collaboration with international borders, specifically its relationship with the EU.
Speaking at the UK Mission to the European Union this week (February 20), Ashley Alder, chairperson of the FCA, outlined the regulator's priorities when it comes to global cooperation.
Alder said cooperation among regulators is vital and said the FCA is committed to finding consistent international responses to challenges that increasingly give rise to cross-border risks, including ESG and fintech.
He explained the 2023 UK-EU Memorandum of Understanding on Financial Services Cooperation will enable the FCA to deepen relationships with EU counterparts as it pursues similar reforms.
“Effective cooperation matters hugely to enable us to manage the considerable risks that accompany extremely large volumes of cross-border financial activity,” he said.
“And of course, this includes activity between the EU and UK, whose financial services sectors remain closely intertwined.
“Whenever possible I have sought to emphasise our strong commitment to our relationship with the EU, especially with our counterpart financial market regulators.”
UK-EU collaboration
Alder said the UK and EU “must lead by example” when it comes to all of these areas.
“As two of the world’s largest economies, our actions reverberate far beyond our borders,” he said.
“We should demonstrate an unwavering commitment to high standards, openness and cooperation, not only in our bilateral relationship but also in our interactions with other trading partners.”
The FCA said although the UK has left the EU, the ties that bind the UK and Europe together remain incredibly strong.
The City watchdog said it will take full advantage of its ability to pursue a major reform program to tailor financial services regulation to suit UK markets, using its new powers from legislation passed last July.
“In doing so we recognise that in key areas the EU and UK are pursuing similar reforms which, although not identical, signal common causes,” Alder said.
“We are fully alive to the dangers of regulatory fragmentation, and while I believe that we should avoid talking about reforms in terms of ‘divergence’ between the UK and EU, I can also say that we won’t be pursuing change for change’s sake.
“By strengthening our partnerships, enhancing our cooperation and upholding our shared values, we can build a more prosperous future for generations to come.”
Fintech
Within the speech, Alder said fintech is an example of how international cooperation among regulators can support firms and consumers.
This sector is now a “major disruptive force”, challenging traditional financial institutions and driving innovation across the industry.
In each of the seven largest European economies there is now at least one fintech among the top five banks, he explained.
“The attitude of most regulators to these innovations is fairly binary,” he said.
“First, by fostering an environment that encourages fintech ideas to flourish we aim to promote competition, enhance consumer choice and protection as well as encourage economic growth.
