In a speech he made at the recent UK Mission to the European Union, Ashley Alder, chair of UK’s Financial Conduct Authority (FCA) emphasised the importance of continued cooperation between the EU and the UK. Although the EU should “naturally expect” the FCA to independently pursue reforms that suit UK markets now that the UK has left the EU, he acknowledged that “the ties that bind the UK and Europe together – economic, cultural and relationships forged over decades – remain incredibly strong”.
In his year of tenure at the FCA, Ashley Alder claimed that he has “come to understand the challenges to global cooperation amongst regulators in a world where market fragmentation and shifts towards protectionism are an undeniable trend”. Citing conflicts in Europe and the Middle East, the climate crisis, and the “lasting economic drag of Covid” as contributors to the turmoil of current times, he reiterated that effective cooperation “matters hugely” in navigating the ”considerable risks” of cross-border financial activity.
Independent, but not alone
The FCA’s objectives to “enhance market integrity, promote competition and protect consumers” are “fully aligned with an open markets philosophy that prizes healthy competition. With the UK’s status as “the largest market in the world for debt issuance, the largest centre for commercial insurance, number one in foreign exchanges, the second largest base for asset management and the second largest fintech hub”, it is clear that the country has benefitted from the open markets approach.
However, Ashley Alder was keen to state that the UK’s competitiveness objective “does not imply isolationism”, saying, “in an interconnected global economy dependent on international investment, the FCA knows that it can’t achieve its consumer, market integrity and competition objectives alone”.
An example of how the FCA is trying to foster collaboration with its EU partners is the UK’s Overseas Funds Regime, which deems EU states equivalent to the UK, thus allowing EU UCITS funds to be marketed to UK retail investors. Other areas where cross-border collaboration is valuable include ESG, fintech, and the regulation of non-bank institutions.